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. That said, here is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
Supernus Pharmaceuticals (SUPN)
Market Cap: $2.39 billion
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ: SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Why Are We Wary of SUPN?
- Sales trends were unexciting over the last two years as its 2.4% annual growth was below the typical healthcare company
- Smaller revenue base of $665.1 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Supernus Pharmaceuticals’s stock price of $42.68 implies a valuation ratio of 21.4x forward P/E. Read our free research report to see why you should think twice about including SUPN in your portfolio.
Pacific Premier Bancorp (PPBI)
Market Cap: $2.24 billion
With a specialized division that serves homeowners' associations nationwide and a trust division that handles self-directed IRAs with alternative assets, Pacific Premier Bancorp (NASDAQ: PPBI) is a Western US regional bank that provides banking services to small and middle-market businesses, corporations, non-profits, and specialty markets.
Why Should You Dump PPBI?
- Customers borrowered less money this cycle as its net interest income declined by 4.8% annually over the last four years
- Day-to-day expenses have swelled relative to revenue over the last four years as its efficiency ratio increased by 15.4 percentage points
- Earnings per share fell by 9.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
Pacific Premier Bancorp is trading at $23.07 per share, or 0.8x forward P/B. To fully understand why you should be careful with PPBI, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Itron (ITRI)
Market Cap: $5.70 billion
Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ: ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Why Could ITRI Be a Winner?
- Operating margin increased by 10.3 percentage points over the last five years as it refined its cost structure
- Additional sales over the last two years increased its profitability as the 74.4% annual growth in its earnings per share outpaced its revenue
- Rising returns on capital show the company is starting to reap the benefits of its past investments
At $126 per share, Itron trades at 22.9x forward P/E. Is now the right time to buy? See for yourself in our in-depth 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 Strong Momentum 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
