1 Small-Cap Stock with Competitive Advantages and 2 to Keep Off Your Radar

Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.

These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here is one small-cap stock that could be the next 100 bagger and two that could be down big.

Two Small-Cap Stocks to Sell:

Covenant Logistics (CVLG)

Market Cap: $528.5 million

Started with 25 trucks and 50 trailers, Covenant Logistics (NASDAQ:CVLG) is a provider of expedited long haul freight services, offering a range of logistics solutions.

Why Do We Pass on CVLG?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 3% annually over the last two years
2. Earnings per share have dipped by 16.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 23.9 percentage points

Covenant Logistics is trading at $19.90 per share, or 5.6x forward EV-to-EBITDA. To fully understand why you should be careful with CVLG, check out our full research report (it’s free).

TPI Composites (TPIC)

Market Cap: $43.53 million

Founded in 1968, TPI Composites (NASDAQ:TPIC) manufactures composite wind turbine blades and provides related precision molding and assembly systems.

Why Are We Out on TPIC?

1. Products, pricing, or go-to-market strategy need some adjustments as its billings have averaged 12.6% declines over the past two years
2. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $0.91 per share, TPI Composites trades at 0.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than TPIC.

One Small-Cap Stock to Watch:

Huron (HURN)

Market Cap: $2.16 billion

Founded in 2002 during a time of significant regulatory change in corporate America, Huron Consulting Group (NASDAQ:HURN) is a professional services company that helps organizations develop growth strategies, optimize operations, and implement digital transformation solutions.

Why Does HURN Stand Out?

1. Impressive 13.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Adjusted operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
3. Share buybacks catapulted its annual earnings per share growth to 34.7%, which outperformed its revenue gains over the last two years

Huron’s stock price of $134.50 implies a valuation ratio of 18.3x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.