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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two that may have trouble.
Two Small-Cap Stocks to Sell:
The New York Times (NYT)
Market Cap: $7.81 billion
Founded in 1851, The New York Times (NYSE: NYT) is an American media organization known for its influential newspaper and expansive digital journalism platforms.
Why Should You Dump NYT?
- Performance surrounding its subscribers has lagged its peers
- Estimated sales growth of 6% for the next 12 months is soft and implies weaker demand
- Waning returns on capital imply its previous profit engines are losing steam
The New York Times is trading at $47.82 per share, or 23x forward price-to-earnings. To fully understand why you should be careful with NYT, check out our full research report (it’s free).
Corcept (CORT)
Market Cap: $5.79 billion
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Are We Hesitant About CORT?
- Smaller revenue base of $675 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 15.9 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 13.6 percentage points
At $54.50 per share, Corcept trades at 25.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than CORT.
One Small-Cap Stock to Buy:
Semrush (SEMR)
Market Cap: $1.36 billion
Started by Oleg Shchegolev while still in university, Semrush (NYSE: SEMR) is a software-as-a-service platform that helps companies optimize their search engine and content marketing efforts.
Why Is SEMR a Top Pick?
- Average billings growth of 23.2% over the last year enhances its liquidity and shows there is steady demand for its products
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable three-year growth trajectory
- Software is difficult to replicate at scale and results in a top-tier gross margin of 82.6%
Semrush’s stock price of $9.55 implies a valuation ratio of 3.1x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
