Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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 100 bagger and two that may have trouble.
Two Small-Cap Stocks to Sell:
Wintrust Financial (WTFC)
Market Cap: $9.57 billion
Founded in 1991 as a community-focused alternative to big banks in the Chicago area, Wintrust Financial (NASDAQGS:WTFC) operates community banks in the Chicago area and provides specialty finance services including insurance premium financing and wealth management.
Why Are We Wary of WTFC?
- Net interest margin increased by -5.2 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
Wintrust Financial is trading at $141.91 per share, or 1.3x forward P/B. Check out our free in-depth research report to learn more about why WTFC doesn’t pass our bar.
Forestar Group (FOR)
Market Cap: $1.31 billion
As a majority-owned subsidiary of homebuilding giant D.R. Horton, Forestar Group (NYSE: FOR) develops and sells finished residential lots to homebuilders, focusing primarily on land acquisition and development for single-family homes.
Why Do We Avoid FOR?
- Cash-burning history makes us doubt the long-term viability of its business model
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Forestar Group’s stock price of $25.76 implies a valuation ratio of 9.6x forward P/E. Read our free research report to see why you should think twice about including FOR in your portfolio.
One Small-Cap Stock to Watch:
ANI Pharmaceuticals (ANIP)
Market Cap: $1.56 billion
With a diverse portfolio of 116 pharmaceutical products and a growing rare disease platform, ANI Pharmaceuticals (NASDAQ: ANIP) develops, manufactures, and markets branded and generic prescription pharmaceuticals, with a focus on rare disease treatments.
Why Do We Like ANIP?
- Annual revenue growth of 34.7% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 19.9% annually over the last five years, massively outpacing its peers
- Free cash flow margin grew by 38.5 percentage points over the last five years, giving the company more chips to play with
At $72.69 per share, ANI Pharmaceuticals trades at 7.8x 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 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.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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.
