1 Small-Cap Stock with Exciting Potential and 2 We Avoid

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.

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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two that may have trouble.

Two Small-Cap Stocks to Sell:

QuidelOrtho (QDEL)

Market Cap: $2.02 billion

Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ:QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.

Why Do We Steer Clear of QDEL?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
2. Free cash flow margin shrank by 21 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

QuidelOrtho’s stock price of $29.21 implies a valuation ratio of 11.7x forward P/E. To fully understand why you should be careful with QDEL, check out our full research report (it’s free for active Edge members).

TFS Financial (TFSL)

Market Cap: $3.70 billion

Tracing its roots back to 1938 during the Great Depression era when savings and loans were vital to homeownership, TFS Financial (NASDAQ:TFSL) is a savings and loan holding company that provides mortgage lending, deposit services, and other retail banking products primarily in Ohio and Florida.

Why Should You Dump TFSL?

1. 2.8% annual net interest income growth over the last five years was slower than its banking peers
2. Net interest margin of 1.7% reflects its high servicing and capital costs
3. Tangible book value per share stagnated over the last two years, limiting its ability to leverage its balance sheet to make additional investments

At $13.55 per share, TFS Financial trades at 2x forward P/B. If you’re considering TFSL for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

Stock Yards Bank (SYBT)

Market Cap: $2.00 billion

Founded in 1904 in Louisville and named after the city's historic livestock market district, Stock Yards Bancorp (NASDAQ:SYBT) operates a regional bank providing commercial banking, wealth management, and trust services across Kentucky, Indiana, and Ohio.

Why Does SYBT Catch Our Eye?

1. Market share has increased this cycle as its 16.9% annual net interest income growth over the last five years was exceptional
2. Additional sales over the last two years increased its profitability as the 6.7% annual growth in its earnings per share outpaced its revenue
3. Capital generation for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust tangible book value per share growth of 25.3%

Stock Yards Bank is trading at $67.80 per share, or 1.9x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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 6 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 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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