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

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.

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 100 bagger and two that may have trouble.

Two Small-Cap Stocks to Sell:

Brookdale (BKD)

Market Cap: $3.72 billion

With a network of over 650 communities serving approximately 59,000 residents across 41 states, Brookdale Senior Living (NYSE:BKD) operates senior living communities across the United States, offering independent living, assisted living, memory care, and continuing care retirement communities.

Why Does BKD Worry Us?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.6% annually over the last five years
2. Estimated sales decline of 4.8% for the next 12 months implies a challenging demand environment
3. High net-debt-to-EBITDA ratio of 12× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Brookdale’s stock price of $15.85 implies a valuation ratio of 17.8x forward EV-to-EBITDA. If you’re considering BKD for your portfolio, see our FREE research report to learn more.

Hilltop Holdings (HTH)

Market Cap: $2.26 billion

Transformed from a residential communities business to a financial services powerhouse in 2007, Hilltop Holdings (NYSE:HTH) is a Texas-based financial holding company that provides banking, broker-dealer, and mortgage origination services.

Why Do We Avoid HTH?

1. Flat net interest income over the last five years suggest it must find different ways to grow during this cycle
2. Efficiency ratio is expected to worsen by 32.1 percentage points over the next year
3. Sales were less profitable over the last five years as its earnings per share fell by 15% annually, worse than its revenue declines

At $37.30 per share, Hilltop Holdings trades at 1x forward P/B. Dive into our free research report to see why there are better opportunities than HTH.

One Small-Cap Stock to Watch:

Cal-Maine (CALM)

Market Cap: $4.00 billion

Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ:CALM) produces, packages, and distributes eggs.

Why Is CALM on Our Radar?

1. Remarkable 18.5% revenue growth over the last three years demonstrates its ability to capture significant market share
2. Share repurchases over the last three years enabled its annual earnings per share growth of 34.7% to outpace its revenue gains
3. CALM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business

Cal-Maine is trading at $83.99 per share, or 26.7x forward P/E. 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 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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.