Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
WSFS Financial (WSFS)
Market Cap: $3.13 billion
Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ: WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.
Why Does WSFS Give Us Pause?
- Muted 9.3% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Net interest income is projected to remain flat over the next 12 months as demand decelerates from its five-year trend
- Earnings per share lagged its peers over the last two years as they only grew by 1.2% annually
WSFS Financial’s stock price of $57.19 implies a valuation ratio of 1.1x forward P/B. Check out our free in-depth research report to learn more about why WSFS doesn’t pass our bar.
Atlantic Union Bankshares (AUB)
Market Cap: $5.47 billion
Tracing its roots back to 1902 when it first opened its doors in Virginia, Atlantic Union Bankshares (NYSE: AUB) is a full-service regional bank providing commercial and retail banking, wealth management, and insurance services throughout Virginia and parts of Maryland and North Carolina.
Why Are We Cautious About AUB?
- Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew
- Tangible book value per share was flat over the last five years, indicating it’s failed to build equity value this cycle
- Insufficient tier one capital ratio of 9.8% leaves little margin for error in meeting regulatory liquidity requirements
Atlantic Union Bankshares is trading at $38.35 per share, or 1.1x forward P/B. To fully understand why you should be careful with AUB, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
Ryan Specialty (RYAN)
Market Cap: $6.54 billion
Founded in 2010 by insurance industry veteran Patrick Ryan, Ryan Specialty (NYSE: RYAN) is a wholesale insurance broker and underwriting manager that helps retail brokers place complex or hard-to-place risks with insurance carriers.
Why Do We Love RYAN?
- Core business can prosper without any help from acquisitions as its organic revenue growth averaged 12.8% over the past two years
- Earnings per share grew by 23.1% annually over the last two years and trumped its peers
- Robust free cash flow margin of 18.9% gives it many options for capital deployment
At $51.18 per share, Ryan Specialty trades at 21.8x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
