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.
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 100 bagger and two that may have trouble.
Two Small-Cap Stocks to Sell:
Leggett & Platt (LEG)
Market Cap: $1.49 billion
Founded in 1883, Leggett & Platt (NYSE: LEG) is a diversified manufacturer of products and components for various industries.
Why Do We Think LEG Will Underperform?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Poor free cash flow margin of 6.1% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Leggett & Platt’s stock price of $11.19 implies a valuation ratio of 10.2x forward P/E. Read our free research report to see why you should think twice about including LEG in your portfolio.
MarketAxess (MKTX)
Market Cap: $6.64 billion
Pioneering the shift from phone-based to electronic bond trading since 2000, MarketAxess (NASDAQ: MKTX) operates electronic trading platforms that enable institutional investors and broker-dealers to efficiently trade fixed-income securities like corporate and government bonds.
Why Does MKTX Give Us Pause?
- Muted 5.3% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
MarketAxess is trading at $178.95 per share, or 23x forward P/E. Check out our free in-depth research report to learn more about why MKTX doesn’t pass our bar.
One Small-Cap Stock to Buy:
Fluence Energy (FLNC)
Market Cap: $3.02 billion
Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ: FLNC) helps store renewable energy sources with battery systems.
Why Is FLNC a Good Business?
- Average backlog growth of 21.5% over the past two years shows it has a steady sales pipeline that will drive future orders
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 27.4% outpaced its revenue gains
- Cash burn has decreased over the last five years, showing the company is becoming a more self-sustaining business
At $23.13 per share, Fluence Energy trades at 65.1x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 6 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
