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.

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 may have trouble.

Two Small-Cap Stocks to Sell:

Lamb Weston (LW)

Market Cap: $7.38 billion

Best known for its Grown in Idaho brand, Lamb Weston (NYSE: LW) produces and distributes potato products such as frozen french fries and mashed potatoes.

Why Are We Wary of LW?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Estimated sales decline of 1.4% for the next 12 months implies a challenging demand environment
3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

At $53.67 per share, Lamb Weston trades at 17.6x forward P/E. Dive into our free research report to see why there are better opportunities than LW.

Northwest Bancshares (NWBI)

Market Cap: $2.26 billion

Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.

Why Are We Hesitant About NWBI?

1. Annual net interest income growth of 7.1% over the last five years was below our standards for the banking sector
2. Performance over the past five years shows its incremental sales were less profitable, as its 2.8% annual earnings per share growth trailed its revenue gains
3. Capital trends were unexciting over the last five years as its 1.4% annual tangible book value per share growth was below the typical banking firm

Northwest Bancshares’s stock price of $15.42 implies a valuation ratio of 1.1x forward P/B. To fully understand why you should be careful with NWBI, check out our full research report (it’s free).

One Small-Cap Stock to Buy:

Snap (SNAP)

Market Cap: $8.86 billion

Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.

Why Will SNAP Outperform?

1. Excellent EBITDA margin of 13.2% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last few years
2. Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 36.4% outpaced its revenue gains
3. Free cash flow margin increased by 9.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders

Snap is trading at $5.24 per share, or 7x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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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.