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 best left ignored.
Two Small-Cap Stocks to Sell:
L.B. Foster (FSTR)
Market Cap: $440.5 million
Founded with a $2,500 loan, L.B. Foster (NASDAQ: FSTR) is a provider of products and services for the transportation and energy infrastructure sectors, including rail products, construction materials, and coating solutions.
Why Does FSTR Worry Us?
- Backlog growth averaged a weak 1.7% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
- Forecasted revenue decline of 2.3% for the upcoming 12 months implies demand will fall off a cliff
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $41.98 per share, L.B. Foster trades at 0.8x trailing 12-month price-to-sales. Dive into our free research report to see why there are better opportunities than FSTR.
Landstar (LSTR)
Market Cap: $7.64 billion
Covering billions of miles throughout North America, Landstar (NASDAQ: LSTR) is a transportation company specializing in freight and last-mile delivery services.
Why Should You Sell LSTR?
- Annual sales declines of 2.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 8.1% annually
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Landstar’s stock price of $219.30 implies a valuation ratio of 37.7x forward P/E. Read our free research report to see why you should think twice about including LSTR in your portfolio.
One Small-Cap Stock to Watch:
Cohen & Steers (CNS)
Market Cap: $3.91 billion
Founded in 1986 as a pioneer in real estate investment trusts (REITs), Cohen & Steers (NYSE: CNS) is an investment manager specializing in real estate securities, infrastructure, real assets, and preferred securities for institutional and individual investors.
Why Is CNS on Our Radar?
- Balance sheet strength has increased this cycle as its 20.7% annual tangible book value per share growth over the last two years was exceptional
- ROE punches in at 37.3%, illustrating management’s expertise in identifying profitable investments
Cohen & Steers is trading at $77.15 per share, or 21.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
