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. That said, here are two small-cap stocks that could be the next 100 baggers and one that could be down big.
One Small-Cap Stock to Sell:
Harley-Davidson (HOG)
Market Cap: $2.94 billion
Founded in 1903, Harley-Davidson (NYSE: HOG) is an American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.
Why Should You Dump HOG?
- Sluggish trends in its motorcycles sold suggest customers aren’t adopting its solutions as quickly as the company hoped
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
- 13× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Harley-Davidson is trading at $24.20 per share, or 7.3x forward P/E. If you’re considering HOG for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Watch:
AAON (AAON)
Market Cap: $5.94 billion
Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Are We Backing AAON?
- Annual revenue growth of 20.7% over the past five years was outstanding, reflecting market share gains this cycle
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 18.2% annually
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
AAON’s stock price of $73 implies a valuation ratio of 30.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Medpace (MEDP)
Market Cap: $8.57 billion
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ: MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Why Are We Positive On MEDP?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 17.8% over the past two years
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Rising returns on capital show management is finding more attractive investment opportunities
At $297 per share, Medpace trades at 23.9x forward P/E. Is now a good time to buy? See for yourself 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 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 Kadant (+351% 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
