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.
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 be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
Bark (BARK)
Market Cap: $140.5 million
Making a name for itself with the BarkBox, Bark (NYSE: BARK) specializes in subscription-based, personalized pet products.
Why Are We Out on BARK?
- Products and services have few die-hard fans as sales have declined by 5.3% annually over the last two years
- Negative free cash flow raises questions about the return timeline for its investments
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Bark is trading at $0.82 per share, or 0.3x forward price-to-sales. Read our free research report to see why you should think twice about including BARK in your portfolio.
Triumph Financial (TFIN)
Market Cap: $1.29 billion
Originally focused on traditional banking before pivoting to serve the transportation sector, Triumph Financial (NASDAQ: TFIN) provides specialized financial services to the trucking industry, including payments processing, factoring, banking, and data intelligence solutions.
Why Do We Think Twice About TFIN?
- Net interest income trends were unexciting over the last five years as its 5.3% annual growth was below the typical banking firm
- Net interest margin shrank by 130.7 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
- Earnings per share fell by 22.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Triumph Financial’s stock price of $54.24 implies a valuation ratio of 1.5x forward P/B. To fully understand why you should be careful with TFIN, check out our full research report (it’s free for active Edge members).
One Small-Cap Stock to Buy:
Nova (NVMI)
Market Cap: $9.16 billion
Headquartered in Israel, Nova (NASDAQ: NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Why Is NVMI a Top Pick?
- Market share has increased this cycle as its 26.3% annual revenue growth over the last two years was exceptional
- Earnings per share grew by 33.1% annually over the last five years, massively outpacing its peers
- Robust free cash flow margin of 28% gives it many options for capital deployment
At $306.01 per share, Nova trades at 34.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
Fresh US-China trade tensions just tanked stocks—but strong bank earnings are fueling a sharp rebound. Don’t miss the bounce.
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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