1 Small-Cap Stock with Solid Fundamentals and 2 to Steer Clear Of
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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two that could be down big.
Market Cap: $483.1 million
Founded by explorer Sven-Olof Lindblad in 1979, Lindblad Expeditions (NASDAQ:LIND) offers cruising experiences to remote destinations in partnership with National Geographic.
Why Is LIND Risky?
Annual revenue growth of 13.4% over the last five years was below our standards for the consumer discretionary sector
Incremental sales over the last five years were much less profitable as its earnings per share fell by 73% annually while its revenue grew
Projected 3.8 percentage point decline in its free cash flow margin next year reflects the company's plans to increase its investments to defend its market position
Lindblad Expeditions's stock price of $8.72 implies a valuation ratio of 4.3x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why LIND doesn't pass our bar.
Market Cap: $1.29 billion
Founded in 1989 as a pioneer in regenerative medicine technology, Integra LifeSciences (NASDAQ:IART) develops and manufactures medical technologies for neurosurgery, wound care, and surgical reconstruction, including regenerative tissue products and surgical instruments.
Why Are We Out on IART?
Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1.4% annually
Free cash flow margin dropped by 10.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Integra LifeSciences is trading at $16.69 per share, or 6.7x forward price-to-earnings. To fully understand why you should be careful with IART, check out our full research report (it's free).
Market Cap: $878.3 million
Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.
Why Are We Positive On THR?
Offerings are difficult to replicate at scale and lead to a top-tier gross margin of 42.3%
Operating margin improvement of 9.5 percentage points over the last five years demonstrates its ability to scale efficiently
Free cash flow margin expanded by 3.2 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $26.07 per share, Thermon trades at 13.3x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it's free.
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
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