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.

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 is one small-cap stock that could amplify your portfolio’s returns and two that may have trouble.

Two Small-Cap Stocks to Sell:

Sanmina (SANM)

Market Cap: $4.72 billion

Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.

Why Do We Pass on SANM?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 6.2% annually over the last two years
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 8.2%
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

Sanmina’s stock price of $88.25 implies a valuation ratio of 13.1x forward P/E. Read our free research report to see why you should think twice about including SANM in your portfolio.

UniFirst (UNF)

Market Cap: $3.52 billion

With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE: UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.

Why Does UNF Give Us Pause?

1. Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 2.7% annually while its revenue grew
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging

At $189.37 per share, UniFirst trades at 23.4x forward P/E. To fully understand why you should be careful with UNF, check out our full research report (it’s free).

One Small-Cap Stock to Watch:

Cullen/Frost Bankers (CFR)

Market Cap: $8.30 billion

With roots dating back to 1868 and a strong regional focus across the Lone Star State, Cullen/Frost Bankers (NYSE: CFR) is a Texas-based bank holding company that provides commercial banking, consumer services, wealth management, and insurance through its primary subsidiary, Frost Bank.

Why Do We Watch CFR?

1. Impressive 13.8% annual net interest income growth over the last four years indicates it’s winning market share this cycle
2. Net interest margin expanded by 55.3 basis points (100 basis points = 1 percentage point) over the last two years, providing additional flexibility for investments
3. Balance sheet strength has increased this cycle as its 22.1% annual tangible book value per share growth over the last two years was exceptional

Cullen/Frost Bankers is trading at $129.14 per share, or 2x 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

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. 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.