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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are two small-cap stocks that could be the next 100 baggers and one that may have trouble.
One Small-Cap Stock to Sell:
Option Care Health (OPCH)
Market Cap: $3.54 billion
With a nationwide network of 177 locations serving 43 states and a team of over 4,500 clinicians, Option Care Health (NASDAQ: OPCH) is the largest independent provider of home and alternate site infusion services, delivering medications and clinical support to patients across the United States.
Why Are We Wary of OPCH?
- Estimated sales growth of 4.3% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin didn’t grow over the last five years
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
At $23.65 per share, Option Care Health trades at 12x forward P/E. Read our free research report to see why you should think twice about including OPCH in your portfolio.
Two Small-Cap Stocks to Watch:
Karat Packaging (KRT)
Market Cap: $934.2 million
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Why Is KRT a Top Pick?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.8% annual sales growth over the last two years
- Earnings per share grew by 25.7% annually over the last two years, massively outpacing its peers
- Free cash flow margin increased by 13.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Karat Packaging’s stock price of $46.86 implies a valuation ratio of 25.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Custom Truck One Source (CTOS)
Market Cap: $2.10 billion
Inspired by a family gas station, Custom Truck One Source (NYSE: CTOS) is a distributor of trucks and heavy equipment.
Why Are We Positive on CTOS?
- Impressive 14.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share buybacks catapulted its annual earnings per share growth to 41%, which outperformed its revenue gains over the last two years
Custom Truck One Source is trading at $9.25 per share, or 41.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
