2 Small-Cap Stocks on Our Buy List and 1 We Ignore

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are two small-cap stocks that could be the next big thing and one best left ignored.

One Small-Cap Stock to Sell:

Target Hospitality (TH)

Market Cap: $801.2 million

Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services.

Why Should You Sell TH?

1. Number of utilized beds has disappointed over the past two years, indicating weak demand for its offerings
2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 10.1% annually
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Target Hospitality is trading at $8.03 per share, or 16.8x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TH in your portfolio.

Two Small-Cap Stocks to Buy:

Blue Bird (BLBD)

Market Cap: $1.55 billion

With around a century of experience, Blue Bird (NASDAQ:BLBD) is a manufacturer of school buses and complementary parts.

Why Is BLBD a Top Pick?

1. Annual revenue growth of 14.3% over the past two years was outstanding, reflecting market share gains this cycle
2. Free cash flow margin grew by 20.1 percentage points over the last five years, giving the company more chips to play with
3. Returns on capital are climbing as management makes more lucrative bets

Blue Bird’s stock price of $48.86 implies a valuation ratio of 11.4x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Planet Labs (PL)

Market Cap: $8.38 billion

Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE:PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.

Why Do We Love PL?

1. Annual revenue growth of 23.1% over the last five years was superb and indicates its market share increased during this cycle
2. Free cash flow turned positive over the last five years, showing the company is at an important crossroads
3. Historical investments are beginning to pay off as its returns on capital are growing

At $27.21 per share, Planet Labs trades at 1,026.5x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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.