1 Small-Cap Stock to Own for Decades and 2 That Underwhelm
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.
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 best left ignored.
Two Small-Cap Stocks to Sell:
Boise Cascade (BCC)
Market Cap: $2.96 billion
Formed through the merger of two lumber companies, Boise Cascade Company (NYSE:BCC) manufactures and distributes wood products and other building materials.
Why Do We Think BCC Will Underperform?
- Annual sales declines of 3.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Free cash flow margin shrank by 6.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital suggest its earlier profit pools are drying up
Boise Cascade is trading at $83.20 per share, or 22x forward P/E. Check out our free in-depth research report to learn more about why BCC doesn’t pass our bar.
TriCo Bancshares (TCBK)
Market Cap: $1.58 billion
Founded in 1975 and headquartered in Chico, California, TriCo Bancshares (NASDAQ:TCBK) operates Tri Counties Bank, providing personal, small business, and commercial banking services through branches across California.
Why Is TCBK Not Exciting?
- 6.4% annual net interest income growth over the last five years was slower than its banking peers
- Earnings per share lagged its peers over the last two years as they only grew by 2.4% annually
- Estimated tangible book value per share growth of 7.8% for the next 12 months implies profitability will slow from its two-year trend
TriCo Bancshares’s stock price of $49.43 implies a valuation ratio of 1.2x forward P/B. To fully understand why you should be careful with TCBK, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
Blue Bird (BLBD)
Market Cap: $1.98 billion
With around a century of experience, Blue Bird (NASDAQ:BLBD) is a manufacturer of school buses and complementary parts.
Why Is BLBD a Good Business?
- Market share has increased this cycle as its 11.9% annual revenue growth over the last five years was exceptional
- Free cash flow margin expanded by 23.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Improving returns on capital reflect management’s ability to monetize investments
At $62.57 per share, Blue Bird trades at 13.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
