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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, here is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
8x8 (EGHT)
Market Cap: $267.5 million
Named after its founding year (1987) with "8x8" representing binary code for communications, 8x8 (NASDAQ: EGHT) provides cloud-based contact center and unified communications solutions that enable businesses to manage customer interactions and internal communications through a single platform.
Why Should You Sell EGHT?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 2.4% underwhelmed
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Operating margin improved by 2.1 percentage points over the last year as it eliminated redundant costs
8x8 is trading at $1.96 per share, or 0.4x forward price-to-sales. Read our free research report to see why you should think twice about including EGHT in your portfolio.
Universal Logistics (ULH)
Market Cap: $634.5 million
Founded in 1932, Universal Logistics (NASDAQ: ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.
Why Should You Dump ULH?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.2% annually over the last two years
- Waning returns on capital imply its previous profit engines are losing steam
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $24.08 per share, Universal Logistics trades at 23x forward P/E. Dive into our free research report to see why there are better opportunities than ULH.
One Small-Cap Stock to Watch:
Boot Barn (BOOT)
Market Cap: $5.22 billion
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE: BOOT) is a western-inspired apparel and footwear retailer.
Why Do We Like BOOT?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.8% growth over the past two years
- Market share is on track to rise over the next 12 months as its 14.4% projected revenue growth implies demand will accelerate from its three-year trend
Boot Barn’s stock price of $169.13 implies a valuation ratio of 20.3x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
