1 Small-Cap Stock to Keep an Eye On and 2 That Underwhelm

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.

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 could be down big.

Two Small-Cap Stocks to Sell:

Denny's (DENN)

Market Cap: $316.2 million

Open around the clock, Denny’s (NASDAQ:DENN) is a chain of diner restaurants serving breakfast and traditional American fare.

Why Do We Think DENN Will Underperform?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
2. Revenue base of $457.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Denny's is trading at $6.14 per share, or 15x forward P/E. To fully understand why you should be careful with DENN, check out our full research report (it’s free for active Edge members).

Conagra (CAG)

Market Cap: $8.35 billion

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 Should You Dump CAG?

1. Declining unit sales over the past two years suggest it might have to lower prices to stimulate growth
2. Projected sales decline of 2% for the next 12 months points to an even tougher demand environment ahead
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its falling returns suggest its earlier profit pools are drying up

Conagra’s stock price of $17.45 implies a valuation ratio of 9.8x forward P/E. Check out our free in-depth research report to learn more about why CAG doesn’t pass our bar.

One Small-Cap Stock to Watch:

United Parks & Resorts (PRKS)

Market Cap: $1.74 billion

Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE:PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.

Why Does PRKS Stand Out?

1. Impressive 23.8% annual revenue growth over the last five years indicates it’s winning market share
2. Excellent operating margin of 25.3% highlights the efficiency of its business model
3. Share repurchases over the last five years enabled its annual earnings per share growth of 25.4% to outpace its revenue gains

At $32.01 per share, United Parks & Resorts trades at 7.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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

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