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 are two small-cap stocks that could be the next big thing and one best left ignored.
One Small-Cap Stock to Sell:
YETI (YETI)
Market Cap: $2.89 billion
Founded by two brothers from Texas, YETI (NYSE: YETI) specializes in durable outdoor goods including coolers, drinkware, and other gear tailored to adventure enthusiasts.
Why Does YETI Give Us Pause?
- Annual revenue growth of 6.3% over the last two years was below our standards for the consumer discretionary sector
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 2.4 percentage points over the next year
- Waning returns on capital imply its previous profit engines are losing steam
YETI is trading at $35.58 per share, or 14.4x forward P/E. If you’re considering YETI for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Watch:
JFrog (FROG)
Market Cap: $5.64 billion
Named after the amphibian that continuously evolves from egg to tadpole to adult, JFrog (NASDAQ: FROG) provides a platform that helps organizations securely create, store, manage, and distribute software packages across any system.
Why Do We Like FROG?
- Market share has increased as its 23.3% annual revenue growth over the last two years was exceptional
- Average billings growth of 26.1% over the last year enhances its liquidity and shows there is steady demand for its products
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
At $48.69 per share, JFrog trades at 10.2x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Pathward Financial (CASH)
Market Cap: $1.62 billion
Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ: CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.
Why Will CASH Outperform?
- Annual net interest income growth of 14% over the past five years was outstanding, reflecting market share gains this cycle
- Differentiated product suite leads to a Strong performance of its loan book leads to a High-yielding loan book and low cost of funds result in a best-in-class net interest margin of 7%
- Share repurchases over the last two years enabled its annual earnings per share growth of 15.7% to outpace its revenue gains
Pathward Financial’s stock price of $70.50 implies a valuation ratio of 1.6x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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