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. That said, 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:
Beyond Meat (BYND)
Market Cap: $489.9 million
A pioneer at the forefront of the plant-based protein revolution, Beyond Meat (NASDAQ: BYND) is a food company specializing in alternatives to traditional meat products.
Why Do We Think BYND Will Underperform?
- Declining unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 16.7 percentage points
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Beyond Meat’s stock price of $1.09 implies a valuation ratio of 0.3x forward price-to-sales. Check out our free in-depth research report to learn more about why BYND doesn’t pass our bar.
P10 (PX)
Market Cap: $1.09 billion
Operating as a bridge between institutional investors and hard-to-access private market opportunities, P10 (NYSE: PX) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.
Why Are We Hesitant About PX?
- Performance over the past two years shows its incremental sales were less profitable, as its 7.1% annual earnings per share growth trailed its revenue gains
- Underwhelming 5.8% return on equity reflects management’s difficulties in finding profitable growth opportunities
At $9.91 per share, P10 trades at 9.5x forward P/E. To fully understand why you should be careful with PX, check out our full research report (it’s free for active Edge members).
One Small-Cap Stock to Buy:
ESCO (ESE)
Market Cap: $5.69 billion
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE: ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
Why Are We Bullish on ESE?
- Market share is on track to rise over the next 12 months as its 14% projected revenue growth implies demand will accelerate from its two-year trend
- Superior product capabilities and pricing power result in a stellar gross margin of 39.2%
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 22.4% over the last two years outstripped its revenue performance
ESCO is trading at $220.15 per share, or 30.2x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-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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