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 big thing and two that may have trouble.
Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE:CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.
Why Do We Think CAG Will Underperform?
Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
Operating margin declined by 26.2 percentage points over the last year as its sales cratered
Conagra is trading at $16.61 per share, or 11.4x forward P/E. If you're considering CAG for your portfolio, see our FREE research report to learn more.
A pioneer in connected home audio systems, Sonos (NASDAQ:SONO) offers a range of premium wireless speakers and sound systems.
Annual revenue declines of 2.6% over the last five years indicate problems with its market positioning
Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 11.5% annually, worse than its revenue
Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.3% for the last two years
At $15.45 per share, Sonos trades at 17.4x forward P/E. To fully understand why you should be careful with SONO, check out our full research report (it's free).
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.
Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 6.7% over the past two years
Demand for the next 12 months is expected to accelerate above its three-year trend as Wall Street forecasts robust revenue growth of 14.5%
Boot Barn's stock price of $163.79 implies a valuation ratio of 18.5x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it's free.
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum 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.