1 Small-Cap Stock on Our Watchlist and 2 to 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.

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:

Movado (MOV)

Market Cap: $342.4 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 Is MOV Risky?

1. Products and services have few die-hard fans as sales have declined by 6% annually over the last two years
2. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
3. Eroding returns on capital suggest its historical profit centers are aging

At $15.40 per share, Movado trades at 0.5x trailing 12-month price-to-sales. Check out our free in-depth research report to learn more about why MOV doesn’t pass our bar.

Progyny (PGNY)

Market Cap: $1.85 billion

Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ:PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.

Why Do We Think Twice About PGNY?

1. Modest revenue base of $1.21 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
2. Estimated sales growth of 3% for the next 12 months implies demand will slow from its two-year trend
3. Push for growth has led to negative returns on capital, signaling value destruction

Progyny is trading at $21.75 per share, or 13.1x forward P/E. To fully understand why you should be careful with PGNY, check out our full research report (it’s free).

One Small-Cap Stock to Watch:

AZZ (AZZ)

Market Cap: $2.73 billion

Responsible for projects like nuclear facilities, AZZ (NYSE:AZZ) is a provider of metal coating and power infrastructure solutions.

Why Do We Like AZZ?

1. 9.2% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
2. Operating margin improvement of 5.7 percentage points over the last five years demonstrates its ability to scale efficiently
3. Incremental sales significantly boosted profitability as its annual earnings per share growth of 24% over the last two years outstripped its revenue performance

AZZ’s stock price of $91.28 implies a valuation ratio of 15.7x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.