Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two that could be down big.
Two Small-Cap Stocks to Sell:
Himax (HIMX)
Market Cap: $1.91 billion
Taiwan-based Himax Technologies (NASDAQ: HIMX) is a leading manufacturer of display driver chips and timing controllers used in TVs, laptops, and mobile phones.
Why Do We Steer Clear of HIMX?
- Annual sales declines of 1.3% for the past five years show its products and services struggled to connect with the market during this cycle
- Operating margin declined by 29.9 percentage points over the last five years as its sales cratered
- 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Himax’s stock price of $11.10 implies a valuation ratio of 48.1x forward P/E. If you’re considering HIMX for your portfolio, see our FREE research report to learn more.
Helix Energy Solutions (HLX)
Market Cap: $1.43 billion
Playing a pivotal role in the 2010 Macondo oil spill response with its Q4000 vessel, Helix Energy Solutions (NYSE: HLX) provides specialized services to extend the life of offshore oil and gas wells and decommission aging infrastructure.
Why Are We Wary of HLX?
- Revenue base of $1.30 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Costly operations and weak unit economics result in an inferior gross margin of 11.4% that must be offset through higher production volumes
At $9.80 per share, Helix Energy Solutions trades at 1.1x forward price-to-sales. Check out our free in-depth research report to learn more about why HLX doesn’t pass our bar.
One Small-Cap Stock to Watch:
UMB Financial (UMBF)
Market Cap: $9.41 billion
With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ: UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.
Why Are We Positive On UMBF?
- Annual net interest income growth of 24.7% over the last five years was superb and indicates its market share increased during this cycle
- Net interest margin expanded by 55.4 basis points (100 basis points = 1 percentage point) over the last two years, providing additional flexibility for investments
- Anticipated efficiency ratio improvement of -7 percentage points over the next year signals it will gain leverage on its fixed costs and become more productive
UMB Financial is trading at $123.64 per share, or 1.1x forward P/B. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
