1 Small-Cap Stock with Solid Fundamentals and 2 We Find Risky

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 be the next 100 bagger and two that could be down big.

Two Small-Cap Stocks to Sell:

Spectrum Brands (SPB)

Market Cap: $1.43 billion

A leader in multiple consumer product categories, Spectrum Brands (NYSE:SPB) is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.

Why Do We Steer Clear of SPB?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. ROIC of 0.9% reflects management’s challenges in identifying attractive investment opportunities

Spectrum Brands’s stock price of $61.27 implies a valuation ratio of 13.7x forward P/E. Read our free research report to see why you should think twice about including SPB in your portfolio.

Eastern Bank (EBC)

Market Cap: $4.52 billion

Founded in 1818 as one of America's oldest mutual banks before converting to a public company in 2020, Eastern Bankshares (NASDAQ:EBC) operates as a bank holding company providing commercial and retail banking services primarily in Massachusetts, New Hampshire, and Rhode Island.

Why Does EBC Fall Short?

1. Net interest margin of 3.1% reflects its high servicing and capital costs
2. Estimated tangible book value per share decline of 3.5% for the next 12 months implies a challenging profitability environment
3. Underwhelming 1.9% return on equity reflects management’s difficulties in finding profitable growth opportunities

Eastern Bank is trading at $18.97 per share, or 1.1x forward P/B. Check out our free in-depth research report to learn more about why EBC doesn’t pass our bar.

One Small-Cap Stock to Watch:

Live Oak Bancshares (LOB)

Market Cap: $1.65 billion

Founded during the 2008 financial crisis with a vision to reimagine small business banking through technology, Live Oak Bancshares (NYSE:LOB) is a bank holding company that specializes in providing online banking services and SBA-guaranteed loans to small businesses across targeted industries nationwide.

Why Do We Like LOB?

1. Impressive 19.9% annual net interest income growth over the last five years indicates it’s winning market share this cycle
2. Operating profits are forecasted to increase over the next year as it scales and becomes more productive
3. Annual tangible book value per share growth of 10.8% over the last five years was superb and indicates its capital strength increased during this cycle

At $35.08 per share, Live Oak Bancshares trades at 1.4x forward P/B. 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.