1 Small-Cap Stock Worth Investigating and 2 We Question
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 amplify your portfolio’s returns and two that may have trouble.
Two Small-Cap Stocks to Sell:
Wabash (WNC)
Market Cap: $502.3 million
With its first trailer reportedly built on two sawhorses, Wabash (NYSE:WNC) offers semi trailers, liquid transportation containers, truck bodies, and equipment for moving goods.
Why Do We Pass on WNC?
- Backlog has dropped by 24.9% on average over the past two years, suggesting it’s losing orders as competition picks up
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Wabash’s stock price of $12.34 implies a valuation ratio of 20.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including WNC in your portfolio.
Vestis (VSTS)
Market Cap: $1.77 billion
Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE:VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.
Why Are We Out on VSTS?
- Sales tumbled by 3.2% annually over the last two years, showing market trends are working against it during this cycle
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Earnings per share have dipped by 50.8% annually over the past four years, which is concerning because stock prices follow EPS over the long term
Vestis is trading at $13.28 per share, or 18.6x forward P/E. If you’re considering VSTS for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
Molina Healthcare (MOH)
Market Cap: $9.85 billion
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE:MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Why Does MOH Stand Out?
- Annual revenue growth of 13.7% over the last five years beat the sector average and underscores the unique value of its offerings
- Economies of scale give it fixed cost leverage when sales grow as well as negotiating power over membership pricing and reimbursement rates
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
At $188.87 per share, Molina Healthcare trades at 26.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.