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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two that could be down big.
Two Small-Cap Stocks to Sell:
Napco (NSSC)
Market Cap: $1.52 billion
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ: NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Why Does NSSC Give Us Pause?
- 3.4% annual revenue growth over the last two years was slower than its business services peers
- Modest revenue base of $181.6 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Estimated sales growth of 3.1% for the next 12 months is soft and implies weaker demand
Napco is trading at $42.50 per share, or 35.8x forward P/E. If you’re considering NSSC for your portfolio, see our FREE research report to learn more.
SAIC (SAIC)
Market Cap: $4.78 billion
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ: SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Is SAIC Risky?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last two years
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Free cash flow margin shrank by 2.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
SAIC’s stock price of $102.50 implies a valuation ratio of 10.6x forward P/E. Check out our free in-depth research report to learn more about why SAIC doesn’t pass our bar.
One Small-Cap Stock to Watch:
First Financial Bancorp (FFBC)
Market Cap: $2.52 billion
Tracing its roots back to 1863 during the Civil War era, First Financial Bancorp (NASDAQ: FFBC) is a bank holding company that provides commercial banking, lending, deposit services, and wealth management to individuals and businesses.
Why Are We Fans of FFBC?
- Share repurchases over the last five years enabled its annual earnings per share growth of 8% to outpace its revenue gains
- Impressive 17% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
- Industry-leading 10% return on equity demonstrates management’s skill in finding high-return investments
At $26.37 per share, First Financial Bancorp trades at 1x 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
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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