2 Small-Cap Stocks with Solid Fundamentals and 1 We Turn Down

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 best left ignored.

One Small-Cap Stock to Sell:

Pangaea (PANL)

Market Cap: $318.4 million

Established in 1996, Pangaea Logistics (NASDAQ:PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.

Why Are We Out on PANL?

1. Sales trends were unexciting over the last two years as its 3.2% annual growth was below the typical industrials company
2. Earnings per share fell by 41.1% annually over the last two years while its revenue grew, partly because it diluted shareholders
3. Low free cash flow margin of 0.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $4.85 per share, Pangaea trades at 3.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why PANL doesn’t pass our bar.

Two Small-Cap Stocks to Watch:

Federal Signal (FSS)

Market Cap: $7.24 billion

Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE:FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.

Why Are We Bullish on FSS?

1. Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
2. Additional sales over the last two years increased its profitability as the 28.5% annual growth in its earnings per share outpaced its revenue
3. Free cash flow margin increased by 4.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Federal Signal’s stock price of $119.60 implies a valuation ratio of 27.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

Primoris (PRIM)

Market Cap: $7.46 billion

Listed on the NASDAQ in 2008, Primoris (NYSE:PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.

Why Do We Like PRIM?

1. Market share has increased this cycle as its 15.9% annual revenue growth over the last five years was exceptional
2. Backlog has averaged 159% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
3. Earnings per share grew by 28.6% annually over the last two years and trumped its peers

Primoris is trading at $135.57 per share, or 27.5x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. 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 Kadant (+351% 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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