2 Small-Cap Stocks to Own for Decades and 1 We Brush Off

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.

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. Keeping that in mind, here are two small-cap stocks that could amplify your portfolio’s returns and one best left ignored.

One Small-Cap Stock to Sell:

Preferred Bank (PFBC)

Market Cap: $1.27 billion

Founded in 1991 with a focus on serving the Pacific Rim community in Southern California, Preferred Bank (NASDAQ:PFBC) is a commercial bank that provides banking products and services to small and mid-sized businesses, entrepreneurs, real estate developers, and high net worth individuals.

Why Is PFBC Not Exciting?

1. Muted 9.1% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
2. Estimated net interest income growth of 1.3% for the next 12 months implies demand will slow from its five-year trend
3. 44 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position

Preferred Bank is trading at $107.47 per share, or 1.5x forward P/B. If you’re considering PFBC for your portfolio, see our FREE research report to learn more.

Two Small-Cap Stocks to Buy:

Construction Partners (ROAD)

Market Cap: $6.84 billion

Founded in 2001, Construction Partners (NASDAQ:ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.

Why Do We Love ROAD?

1. Annual revenue growth of 40.5% over the past two years was outstanding, reflecting market share gains this cycle
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 43.7% annually, topping its revenue gains
3. Free cash flow margin grew by 8.8 percentage points over the last five years, giving the company more chips to play with

Construction Partners’s stock price of $120.40 implies a valuation ratio of 33.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

Northwest Pipe (NWPX)

Market Cap: $1.13 billion

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Why Will NWPX Beat the Market?

1. Annual revenue growth of 14.4% over the past five years was outstanding, reflecting market share gains this cycle
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 41.6% exceeded its revenue gains over the last two years
3. Free cash flow margin jumped by 18.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $117.08 per share, Northwest Pipe trades at 22.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.