1 Small-Cap Stock Worth Your Attention and 2 We Question

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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. 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:

Sally Beauty (SBH)

Market Cap: $1.43 billion

Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE:SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.

Why Do We Think SBH Will Underperform?

1. Lack of new stores suggest it’s attempting to increase revenue at existing locations because demand is sluggish
2. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
3. Subscale operations are evident in its revenue base of $3.71 billion, meaning it has fewer distribution channels than its larger rivals

Sally Beauty’s stock price of $14.77 implies a valuation ratio of 7.2x forward P/E. To fully understand why you should be careful with SBH, check out our full research report (it’s free).

ePlus (PLUS)

Market Cap: $2.04 billion

Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ:PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.

Why Does PLUS Fall Short?

1. Muted 4.4% annual revenue growth over the last two years shows its demand lagged behind its business services peers
2. Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
3. Low free cash flow margin of 3.5% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

ePlus is trading at $77.99 per share, or 14.8x forward P/E. Dive into our free research report to see why there are better opportunities than PLUS.

One Small-Cap Stock to Buy:

Fluence Energy (FLNC)

Market Cap: $1.96 billion

Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ:FLNC) helps store renewable energy sources with battery systems.

Why Will FLNC Beat the Market?

1. Average backlog growth of 18.1% over the past two years shows it has a steady sales pipeline that will drive future orders
2. Earnings per share have massively outperformed its peers over the last four years, increasing by 36.4% annually
3. Cash burn has become less severe over the last five years, showing the company is making some progress toward financial sustainability

At $14.78 per share, Fluence Energy trades at 212.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.