Small-Cap Stocks: Promise & Peril
Update: 2025-11-21
Description
Exploring Small-Cap Stocks: Opportunities and RisksThis episode delves into the world of small-cap stocks, offering potential big gains but also significant risks. We examine three companies: Commerce (CMRC), Ladder Capital (LADR), and Abercrombie & Fitch (ANF).Commerce, a software platform for online stores, faces a slowdown with a four point one percent estimated sales growth and a low eight point three percent free cash flow margin. Ladder Capital, a real estate investment trust, struggles with declining sales, falling earnings per share, and a flat tangible book value per share, raising concerns about its ability to create shareholder value.On a positive note, Abercrombie & Fitch shows strong performance with high demand in its brick-and-mortar stores, a strong gross margin, and impressive earnings per share growth. The markets growth is concentrated in a few large companies, making many investors nervous. Smart investors are looking for quality companies overlooked and trading at a fraction of the price.
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