1 Small-Cap Stock with Impressive Fundamentals and 2 We Turn Down

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 be the next 100 bagger and two best left ignored.

Two Small-Cap Stocks to Sell:

Movado (MOV)

Market Cap: $571.4 million

With its watches displayed in 20 museums around the world, Movado (NYSE:MOV) is a watchmaking company with a portfolio of watch brands and accessories.

Why Should You Dump MOV?

1. Muted 4.7% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
2. Low free cash flow margin of 4.3% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Movado is trading at $25.80 per share, or 15.1x forward P/E. To fully understand why you should be careful with MOV, check out our full research report (it’s free).

First Busey (BUSE)

Market Cap: $2.32 billion

Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey (NASDAQ:BUSE) is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.

Why Does BUSE Fall Short?

1. Inferior net interest margin of 3.3% means it must compensate for lower profitability through increased loan originations
2. Performance over the past five years shows its incremental sales were less profitable, as its 4.9% annual earnings per share growth trailed its revenue gains
3. Projected tangible book value per share decline of 3.2% for the next 12 months points to tough credit quality challenges ahead

At $26.44 per share, First Busey trades at 1x forward P/B. Check out our free in-depth research report to learn more about why BUSE doesn’t pass our bar.

One Small-Cap Stock to Buy:

FuelCell Energy (FCEL)

Market Cap: $353.5 million

Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.

Why Is FCEL a Top Pick?

1. Average backlog growth of 13.3% over the past two years shows it has a steady sales pipeline that will drive future orders
2. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 25.9% annually
3. Negative free cash flow margin has improved over the last five years, showing the company is one step closer to financial self-sufficiency

FuelCell Energy’s stock price of $7.66 implies a valuation ratio of 1.5x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

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 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.