- LIVE QUOTES
- LEARN
- HELP
Nasdaq
Wall Street JournalEN
1 Small-Cap Stock to Own for Decades and 2 We Question
Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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 could be down big.
Two Small-Cap Stocks to Sell:
Essent Group (ESNT)
Market Cap: $6.36 billion
Serving as a crucial bridge between homebuyers and the American dream of homeownership, Essent Group (NYSE:ESNT) provides private mortgage insurance and title services that enable lenders to offer home loans with down payments of less than 20%.
Why Is ESNT Not Exciting?
- Sluggish 3.1% annualized growth in net premiums earned over the last five years indicates the firm trailed its insurance peers
- Expenses have increased as a percentage of revenue over the last two years as its pre-tax profit margin fell by 10.2 percentage points
- Incremental sales over the last two years were less profitable as its 5% annual earnings per share growth lagged its revenue gains
At $65.75 per share, Essent Group trades at 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than ESNT.
Provident Financial Services (PFS)
Market Cap: $2.65 billion
Founded in 1839 and serving communities across New Jersey, Pennsylvania, and New York, Provident Financial Services (NYSE:PFS) operates a regional bank providing commercial, residential, and consumer lending alongside wealth management and insurance services.
Why Does PFS Give Us Pause?
- Weak unit economics are reflected in its net interest margin of 3.3%, one of the worst among bank companies
- Annual earnings per share growth of 2.2% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 1.3% annually over the last two years
Provident Financial Services’s stock price of $20.25 implies a valuation ratio of 0.9x forward P/B. If you’re considering PFS for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
Vital Farms (VITL)
Market Cap: $1.46 billion
With an emphasis on ethically produced products, Vital Farms (NASDAQ:VITL) specializes in pasture-raised eggs and butter.
Why Is VITL a Good Business?
- Stellar 21.9% growth in unit sales over the past two years demonstrates the high demand for its products
- Market share will likely rise over the next 12 months as its expected revenue growth of 26.5% is robust
- Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 143% annually
Vital Farms is trading at $32.75 per share, or 19.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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-small-cap company Comfort Systems (+782% 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.