1 Small-Cap Stock Worth Your Attention and 2 We Brush Off

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.

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. That said, here is one small-cap stock that could be the next big thing and two that may have trouble.

Two Small-Cap Stocks to Sell:

CNO Financial Group (CNO)

Market Cap: $5.14 billion

Rebranded from Conseco in 2010 to signal a fresh start after navigating financial challenges, CNO Financial Group (NYSE:CNO) develops and markets health insurance, annuities, and life insurance products primarily targeting middle-income pre-retirees and retirees.

Why Are We Out on CNO?

1. Growth in insurance policies was lackluster over the last five years as its 1.2% annual growth underperformed the typical financial institution
2. Day-to-day expenses have swelled relative to revenue over the last five years as its pre-tax profit margin fell by 7.7 percentage points
3. Annual book value per share declines of 7.5% for the past five years show its capital management struggled during this cycle

CNO Financial Group’s stock price of $55.46 implies a valuation ratio of 1.9x forward P/B. Dive into our free research report to see why there are better opportunities than CNO.

World Kinect (WKC)

Market Cap: $1.90 billion

Serving over 150,000 customers from commercial jets to cargo ships to heating oil consumers, World Kinect (NYSE:WKC) procures and delivers fuel and energy products to airlines, shipping companies, trucking fleets, and industrial businesses worldwide.

Why Should You Sell WKC?

1. Costly operations and weak unit economics result in an inferior gross margin of 2.3% that must be offset through higher production volumes
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

World Kinect is trading at $37.24 per share, or 13.9x forward P/E. Check out our free in-depth research report to learn more about why WKC doesn’t pass our bar.

One Small-Cap Stock to Watch:

Herbalife (HLF)

Market Cap: $1.21 billion

With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE:HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.

Why Do We Like HLF?

1. Differentiated product offerings are difficult to replicate at scale and result in a best-in-class gross margin of 90.1%
2. Free cash flow margin increased by 2.7 percentage points over the last year, giving the company more capital to invest or return to shareholders
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities

At $11.61 per share, Herbalife trades at 4.5x 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

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.