1 Small-Cap Stock with Impressive Fundamentals and 2 We Ignore

Barchart·03/31/2026 03:42:30

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.

The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two that could be down big.

Two Small-Cap Stocks to Sell:

Apogee (APOG)

Market Cap: $697.8 million

Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ:APOG) sells architectural products and services such as high-performance glass for commercial buildings.

Why Do We Think APOG Will Underperform?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Projected sales decline of 1.8% for the next 12 months points to an even tougher demand environment ahead
3. Earnings per share have dipped by 12.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term

Apogee’s stock price of $32.44 implies a valuation ratio of 10.6x forward P/E. Read our free research report to see why you should think twice about including APOG in your portfolio.

Triumph Financial (TFIN)

Market Cap: $1.35 billion

Originally focused on traditional banking before pivoting to serve the transportation sector, Triumph Financial (NYSE:TFIN) provides specialized financial services to the trucking industry, including payments processing, factoring, banking, and data intelligence solutions.

Why Do We Steer Clear of TFIN?

1. Net interest income trends were unexciting over the last five years as its 5.3% annual growth was below the typical banking firm
2. Net interest margin shrank by 131.8 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
3. Earnings per share fell by 19.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable

At $56.56 per share, Triumph Financial trades at 1.4x forward P/B. If you’re considering TFIN for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Buy:

Morningstar (MORN)

Market Cap: $6.52 billion

Founded in 1984 by Joe Mansueto with just $80,000 in personal savings, Morningstar (NASDAQ:MORN) provides independent investment data, research, and analysis tools that help investors, advisors, and institutions make informed financial decisions.

Why Is MORN a Good Business?

1. Solid 12% annual revenue growth over the last five years indicates its offering’s solve complex business issues
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. ROE punches in at 16.1%, illustrating management’s expertise in identifying profitable investments

Morningstar is trading at $162.45 per share, or 13.8x forward P/E. Is now a good time to buy? 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 meeting 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

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