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 best left ignored.
Two Small-Cap Stocks to Sell:
IAC (IAC)
Market Cap: $2.78 billion
Originally known as InterActiveCorp and built through Barry Diller's strategic acquisitions since the 1990s, IAC (NASDAQ: IAC) operates a portfolio of category-leading digital businesses including Dotdash Meredith, Angi, and Care.com, focusing on digital publishing, home services, and caregiving platforms.
Why Do We Think IAC Will Underperform?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 20.4% annually over the last two years
- Earnings per share have dipped by 41.3% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- Push for growth has led to negative returns on capital, signaling value destruction
At $34.75 per share, IAC trades at 21.3x forward P/E. To fully understand why you should be careful with IAC, check out our full research report (it’s free).
Byline Bancorp (BY)
Market Cap: $1.18 billion
Ranking as the fifth most active Small Business Administration lender in the country, Byline Bancorp (NYSE: BY) is a Chicago-based bank that provides banking services to small and medium-sized businesses, commercial real estate developers, and consumers.
Why Does BY Give Us Pause?
- Estimated net interest income growth of 4.6% for the next 12 months implies demand will slow from its five-year trend
- Net interest margin shrank by 20.3 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the yields on its loan book are decreasing or the market is becoming more competitive
- Anticipated 2.6 percentage point rise in its efficiency ratio suggests its expenses will increase as a percentage of revenue
Byline Bancorp’s stock price of $25.64 implies a valuation ratio of 0.9x forward P/B. Read our free research report to see why you should think twice about including BY in your portfolio.
One Small-Cap Stock to Buy:
Inter Parfums (IPAR)
Market Cap: $3.88 billion
With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ: IPAR) manufactures and distributes fragrances worldwide.
Why Should You Buy IPAR?
- Strong consumer demand for its brand drove 14.6% annual revenue growth over the last three years, outperforming sector peers
- Free cash flow margin jumped by 8.7 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Industry-leading 27.4% return on capital demonstrates management’s skill in finding high-return investments
Inter Parfums is trading at $120.68 per share, or 22.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 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-micro-cap company Tecnoglass (+1,754% 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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