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.
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. Keeping that in mind, here are two small-cap stocks that could amplify your portfolio’s returns and one that may have trouble.
One Small-Cap Stock to Sell:
Masimo (MASI)
Market Cap: $7.90 billion
Founded in 1989 to solve the "unsolvable problem" of accurate pulse oximetry during patient movement, Masimo (NASDAQ: MASI) develops and manufactures noninvasive patient monitoring technologies, including its breakthrough pulse oximetry systems that accurately measure blood oxygen levels even during patient movement.
Why Does MASI Fall Short?
- Sales tumbled by 16.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $147.07 per share, Masimo trades at 26.4x forward P/E. If you’re considering MASI for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Buy:
LendingClub (LC)
Market Cap: $1.87 billion
Pioneering peer-to-peer lending in the US before evolving into a digital bank, LendingClub (NYSE: LC) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
Why Will LC Beat the Market?
- Market share has increased this cycle as its 24.7% annual revenue growth over the last five years was exceptional
- Earnings per share have massively outperformed its peers over the last two years, increasing by 38.3% annually
LendingClub’s stock price of $16.20 implies a valuation ratio of 11.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Popular (BPOP)
Market Cap: $7.34 billion
Founded in 1893 as the first bank in Puerto Rico to serve the working class, Popular (NASDAQ: BPOP) is a financial holding company that provides retail, mortgage, and commercial banking services primarily in Puerto Rico and the mainland United States.
Why Are We Bullish on BPOP?
- Net interest margin increased by 49.7 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
- Share buybacks catapulted its annual earnings per share growth to 13.1%, which outperformed its revenue gains over the last two years
- Impressive 27% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
Popular is trading at $110.15 per share, or 1.2x forward P/B. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. 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 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-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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