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 are two small-cap stocks that could amplify your portfolio’s returns and one that could be down big.

One Small-Cap Stock to Sell:

HNI (HNI)

Market Cap: $2.03 billion

With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE: HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.

Why Is HNI Not Exciting?

1. Muted 4.9% annual revenue growth over the last five years shows its demand lagged behind its business services peers
2. Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its two-year trend
3. 2.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

HNI’s stock price of $44.23 implies a valuation ratio of 11.9x forward P/E. To fully understand why you should be careful with HNI, check out our full research report (it’s free).

Two Small-Cap Stocks to Watch:

Globalstar (GSAT)

Market Cap: $3.19 billion

Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ: GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.

Why Does GSAT Stand Out?

1. Annual revenue growth of 16.3% over the last two years was superb and indicates its market share increased during this cycle
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 55.5% annually, topping its revenue gains
3. Robust free cash flow margin of 33.4% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety

Globalstar is trading at $25.77 per share, or 44.6x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Magnite (MGNI)

Market Cap: $3.11 billion

Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ: MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.

Why Do We Love MGNI?

1. Annual revenue growth of 33% over the past five years was outstanding, reflecting market share gains this cycle
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 22.8% outpaced its revenue gains
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business

At $21.79 per share, Magnite trades at 23.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking 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 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

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