1 Small-Cap Stock to Research Further and 2 Facing Headwinds

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:

Azenta (AZTA)

Market Cap: $1.26 billion

Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ:AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.

Why Should You Dump AZTA?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.7% annually over the last two years
2. Sales were less profitable over the last five years as its earnings per share fell by 18.6% annually, worse than its revenue declines
3. Cash-burning history and the downward spiral in its margin profile make us wonder if it has a viable business model

Azenta is trading at $27.38 per share, or 30.7x forward P/E. Read our free research report to see why you should think twice about including AZTA in your portfolio.

Xerox (XRX)

Market Cap: $226.6 million

Pioneering the modern office copier and inventing technologies like Ethernet and the laser printer, Xerox (NASDAQ:XRX) provides document management systems, printing technology, and workplace solutions to businesses of all sizes across the globe.

Why Do We Steer Clear of XRX?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.5 percentage points
3. High net-debt-to-EBITDA ratio of 8× increases the risk of forced asset sales or dilutive financing if operational performance weakens

At $1.78 per share, Xerox trades at 3.9x forward P/E. If you’re considering XRX for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

FirstCash (FCFS)

Market Cap: $8.32 billion

Offering a financial lifeline to the unbanked and credit-constrained since 1988, FirstCash (NASDAQ:FCFS) operates pawn stores across the U.S. and Latin America while also providing retail point-of-sale payment solutions for credit-constrained consumers.

Why Is FCFS on Our Radar?

1. Impressive 17.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 23.8% outpaced its revenue gains
3. ROE of 12.6% shows management can invest its resources competently

FirstCash’s stock price of $189.27 implies a valuation ratio of 17.8x forward P/E. Is now the right 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.