1 Small-Cap Stock with Exciting Potential and 2 That Underwhelm

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.

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 amplify your portfolio’s returns and two that may have trouble.

Two Small-Cap Stocks to Sell:

Trustmark (TRMK)

Market Cap: $2.62 billion

Tracing its roots back to 1889 in Mississippi, Trustmark (NASDAQ:TRMK) is a financial services organization providing banking, wealth management, insurance, and mortgage services across five southeastern states.

Why Does TRMK Worry Us?

1. Muted 8.6% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 7.5% annually
3. Below-average return on equity indicates management struggled to find compelling investment opportunities

Trustmark is trading at $43.67 per share, or 1.1x forward P/B. To fully understand why you should be careful with TRMK, check out our full research report (it’s free).

Stellar Bancorp (STEL)

Market Cap: $1.96 billion

Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE:STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.

Why Should You Sell STEL?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.2% annually over the last two years
2. Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 35.6 basis points (100 basis points = 1 percentage point)
3. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable

At $38.71 per share, Stellar Bancorp trades at 1.1x forward P/B. If you’re considering STEL for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

Old Second Bancorp (OSBC)

Market Cap: $1.09 billion

Dating back to 1871 as one of the Chicago area's longest-standing financial institutions, Old Second Bancorp (NASDAQ:OSBC) is an Illinois-based community bank offering deposit services, commercial and consumer loans, wealth management, and mortgage products through its 53 branch locations.

Why Does OSBC Stand Out?

1. Impressive 26.1% annual net interest income growth over the last five years indicates it’s winning market share this cycle
2. Net interest income outlook for the upcoming 12 months implies the business will stay on its desirable five-year growth trajectory
3. Differentiated product suite results in a Strong performance of its loan book is reflected in its High-yielding loan book and low cost of funds lead to a best-in-class net interest margin of 4.8%

Old Second Bancorp’s stock price of $20.67 implies a valuation ratio of 1.1x forward P/B. Is now a good time to buy? See for yourself 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.