1 Small-Cap Stock Worth Your Attention and 2 We Find Risky

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. That said, 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:

Hayward (HAYW)

Market Cap: $3.62 billion

Credited with introducing the first variable-speed pool pump, Hayward (NYSE:HAYW) makes residential and commercial pool equipment and accessories.

Why Are We Cautious About HAYW?

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. Earnings per share have contracted by 26.9% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Hayward’s stock price of $16.72 implies a valuation ratio of 19.5x forward P/E. Check out our free in-depth research report to learn more about why HAYW doesn’t pass our bar.

Schneider (SNDR)

Market Cap: $5.17 billion

Employing thousands of drivers across the country to make deliveries, Schneider (NYSE:SNDR) makes full truckload and intermodal deliveries regionally and across borders.

Why Do We Steer Clear of SNDR?

1. Sales trends were unexciting over the last two years as its 1.6% annual growth was below the typical industrials company
2. Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
3. Eroding returns on capital suggest its historical profit centers are aging

Schneider is trading at $29.65 per share, or 35.5x forward P/E. To fully understand why you should be careful with SNDR, check out our full research report (it’s free).

One Small-Cap Stock to Buy:

Federal Signal (FSS)

Market Cap: $7.10 billion

Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE:FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.

Why Will FSS Outperform?

1. Annual revenue growth of 12.3% over the past five years was outstanding, reflecting market share gains this cycle
2. Exciting sales outlook for the upcoming 12 months calls for 15.6% growth, an acceleration from its two-year trend
3. Incremental sales significantly boosted profitability as its annual earnings per share growth of 27.9% over the last two years outstripped its revenue performance

At $116.64 per share, Federal Signal trades at 24.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

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 Growth Stocks for this month. 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.