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. 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:

BlackLine (BL)

Market Cap: $3.43 billion

Started in 2001 by software engineer Therese Tucker, one of the very few women founders who took their companies public, BlackLine (NASDAQ: BL) provides software for organizations to automate accounting and finance tasks.

Why Does BL Give Us Pause?

1. Average billings growth of 7.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Estimated sales growth of 7.5% for the next 12 months implies demand will slow from its three-year trend
3. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 2.1 percentage points

BlackLine’s stock price of $54 implies a valuation ratio of 5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BL.

Banner Bank (BANR)

Market Cap: $2.14 billion

Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ: BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.

Why Is BANR Not Exciting?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.2% annually over the last two years
2. 3.5% annual net interest income growth over the last four years was slower than its bank peers
3. Sales were less profitable over the last two years as its earnings per share fell by 9% annually, worse than its revenue declines

Banner Bank is trading at $62.30 per share, or 1.1x forward P/B. To fully understand why you should be careful with BANR, check out our full research report (it’s free).

One Small-Cap Stock to Watch:

Enterprise Financial Services (EFSC)

Market Cap: $1.95 billion

Starting as a single bank in Missouri in 1988 and expanding through strategic growth, Enterprise Financial Services (NASDAQ: EFSC) is a financial holding company that offers banking, lending, and wealth management services to businesses and individuals across seven states.

Why Are We Fans of EFSC?

1. Market share has increased this cycle as its 16.6% annual revenue growth over the last five years was exceptional
2. Annual net interest income growth of 19.3% over the past four years was outstanding, reflecting market share gains this cycle
3. Balance sheet strength has increased this cycle as its 10.5% annual tangible book value per share growth over the last five years was exceptional

At $52.75 per share, Enterprise Financial Services trades at 1x 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

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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-small-cap company Exlservice (+354% 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