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. That said, here are two small-cap stocks that could be the next 100 baggers and one that could be down big.
One Small-Cap Stock to Sell:
Phibro Animal Health (PAHC)
Market Cap: $1.40 billion
With a portfolio of approximately 800 product lines serving farmers and veterinarians in 90 countries, Phibro Animal Health (NASDAQ: PAHC) develops, manufactures, and markets health products for livestock and companion animals, including antibacterials, vaccines, nutritional supplements, and mineral additives.
Why Does PAHC Worry Us?
- Smaller revenue base of $1.5 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Estimated sales growth of 2.2% for the next 12 months implies demand will slow from its two-year trend
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Phibro Animal Health is trading at $34.56 per share, or 10.7x forward P/E. Dive into our free research report to see why there are better opportunities than PAHC.
Two Small-Cap Stocks to Watch:
CAVA (CAVA)
Market Cap: $8.30 billion
Starting from a single Washington, D.C. location, CAVA (NYSE: CAVA) operates a fast-casual restaurant chain offering customizable Mediterranean-inspired dishes.
Why Should CAVA Be on Your Watchlist?
- Rapid rollout of new restaurants to capitalize on market opportunities makes sense given its strong same-store sales performance
- Same-store sales growth averaged 9.2% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
At $71.05 per share, CAVA trades at 113.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
First BanCorp (FBP)
Market Cap: $4.48 billion
Tracing its roots back to 1948 in San Juan, First BanCorp (NYSE: FBP) is a bank holding company that provides commercial banking, consumer financing, mortgage services, and insurance products across Puerto Rico, the U.S. mainland, and the Caribbean.
Why Are We Positive on FBP?
- High-yielding loan book and low cost of funds lead to a best-in-class net interest margin of 4.8%
- Efficiency ratio improvement of 12.5 percentage points over the last five years demonstrates its ability to scale effectively
- Share buybacks catapulted its annual earnings per share growth to 17.9%, which outperformed its revenue gains over the last five years
First BanCorp’s stock price of $29.55 implies a valuation ratio of 2.2x forward P/B. Is now the right time to buy? Find out in our full 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.
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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
