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 are three small-cap stocks to avoid and some other investments you should consider instead.
NeoGenomics (NEO)
Market Cap: $2.08 billion
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ:NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
Why Do We Think Twice About NEO?
- Revenue base of $766.3 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Push for growth has led to negative returns on capital, signaling value destruction
- High net-debt-to-EBITDA ratio of 6× could force the company to raise capital on unfavorable terms if market conditions deteriorate
NeoGenomics is trading at $16.18 per share, or 60x forward P/E. Check out our free in-depth research report to learn more about why NEO doesn’t pass our bar.
Origin Bancorp (OBK)
Market Cap: $1.6 billion
Founded in 1912 during the early boom days of Louisiana banking, Origin Bancorp (NYSE:OBK) is a financial holding company that provides personalized banking services to businesses, municipalities, and individuals across Texas, Louisiana, and Mississippi.
Why Is OBK Not Exciting?
- Annual revenue growth of 8.7% over the last five years was below our standards for the banking sector
- Performance over the past five years shows its incremental sales were less profitable, as its 1.5% annual earnings per share growth trailed its revenue gains
- Estimated tangible book value per share growth of 8.2% for the next 12 months implies profitability will slow from its two-year trend
Origin Bancorp’s stock price of $51.90 implies a valuation ratio of 1.2x forward P/B. Dive into our free research report to see why there are better opportunities than OBK.
Glacier Bancorp (GBCI)
Market Cap: $5.6 billion
Operating through seventeen distinct bank divisions with local brands and management teams, Glacier Bancorp (NYSE:GBCI) is a bank holding company that provides various banking services to individuals and businesses across eight western states.
Why Are We Cautious About GBCI?
- Sales trends were unexciting over the last five years as its 8.5% annual growth was below the typical banking company
- Earnings per share fell by 4.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Capital trends were unexciting over the last five years as its 3.1% annual tangible book value per share growth was below the typical banking firm
At $43.01 per share, Glacier Bancorp trades at 1.3x forward P/B. Read our free research report to see why you should think twice about including GBCI in your portfolio.
Stocks We Like More
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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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.