1 Small-Cap Stock on Our Watchlist and 2 to Turn Down

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 may have trouble.

Two Small-Cap Stocks to Sell:

Edgewell Personal Care (EPC)

Market Cap: $1.46 billion

Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.

Why Is EPC Risky?

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. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
3. Capital intensity has ramped up over the last year as its free cash flow margin decreased by 2.7 percentage points

At $30.21 per share, Edgewell Personal Care trades at 9.3x forward P/E. To fully understand why you should be careful with EPC, check out our full research report (it’s free).

USANA (USNA)

Market Cap: $528.8 million

Going to market with a direct selling model rather than through traditional retailers, USANA Health Sciences (NYSE:USNA) manufactures and sells nutritional, personal care, and skincare products.

Why Does USNA Worry Us?

1. Annual revenue declines of 8.7% over the last three years indicate problems with its market positioning
2. Revenue base of $876.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 23% annually, worse than its revenue

USANA’s stock price of $28.04 implies a valuation ratio of 10.4x forward P/E. If you’re considering USNA for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

United Parks & Resorts (PRKS)

Market Cap: $2.47 billion

Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE:PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.

Why Could PRKS Be a Winner?

1. Disciplined cost controls and effective management resulted in a strong two-year operating margin of 26.7%
2. Share buybacks catapulted its annual earnings per share growth to 24.3%, which outperformed its revenue gains over the last five years
3. Returns on capital are climbing as management makes more lucrative bets

United Parks & Resorts is trading at $44.81 per share, or 9.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks That Overcame Trump’s 2018 Tariffs

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 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 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.