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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here are two small-cap stocks that could be the next 100 baggers and one that may have trouble.
One Small-Cap Stock to Sell:
First Hawaiian Bank (FHB)
Market Cap: $3.25 billion
Dating back to 1858 as Hawaii's oldest bank with deep roots in the Pacific island communities, First Hawaiian (NASDAQ: FHB) operates a full-service community bank providing deposit accounts, commercial and consumer loans, credit cards, and wealth management services across Hawaii, Guam, and Saipan.
Why Do We Pass on FHB?
- Annual net interest income growth of 3.8% over the last five years was below our standards for the banking sector
- Earnings per share fell by 1.9% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Products and services are facing profitability challenges during this cycle, as seen in its flat tangible book value per share over the last five years
First Hawaiian Bank is trading at $26.29 per share, or 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than FHB.
Two Small-Cap Stocks to Watch:
Zeta Global (ZETA)
Market Cap: $5.33 billion
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE: ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Are We Bullish on ZETA?
- Average billings growth of 36.4% over the last year enhances its liquidity and shows there is steady demand for its products
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
At $23.94 per share, Zeta Global trades at 2.7x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
John Bean (JBTM)
Market Cap: $7.94 billion
Tracing back to its invention of the mechanical milk bottle filler in 1884, John Bean (NYSE: JBT) designs, manufactures, and sells equipment used for food processing and aviation.
Why Does JBTM Stand Out?
- Annual revenue growth of 40% over the past two years was outstanding, reflecting market share gains this cycle
- Notable projected revenue growth of 21.3% for the next 12 months hints at market share gains
- Earnings per share grew by 16.3% annually over the last two years and trumped its peers
John Bean’s stock price of $152.77 implies a valuation ratio of 19.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
