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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here is one small-cap stock that could amplify your portfolio’s returns and two best left ignored.
Two Small-Cap Stocks to Sell:
Marqeta (MQ)
Market Cap: $2.40 billion
Powering the cards behind innovative fintech services like Block's Cash App, Marqeta (NASDAQ: MQ) provides a cloud-based platform that allows businesses to create customized payment card programs and process card transactions.
Why Are We Cautious About MQ?
- Sales tumbled by 19% annually over the last two years, showing industry trends like AI are working against its favor
- Inability to adjust its cost structure while its revenue declined over the last year led to a 4.3 percentage point drop in the company’s operating margin
- Low free cash flow margin of 9.6% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Marqeta’s stock price of $5.26 implies a valuation ratio of 3.8x forward price-to-sales. If you’re considering MQ for your portfolio, see our FREE research report to learn more.
Driven Brands (DRVN)
Market Cap: $2.64 billion
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ: DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Why Does DRVN Worry Us?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $16.10 per share, Driven Brands trades at 11.6x forward P/E. Dive into our free research report to see why there are better opportunities than DRVN.
One Small-Cap Stock to Buy:
The Bancorp (TBBK)
Market Cap: $3.56 billion
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ: TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
Why Are We Bullish on TBBK?
- Annual net interest income growth of 15.2% 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 results in a High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 4.7%
- Share repurchases over the last two years enabled its annual earnings per share growth of 24.1% to outpace its revenue gains
The Bancorp is trading at $78 per share, or 3.9x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. 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-micro-cap company Tecnoglass (+1,754% 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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