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. That said, here are two small-cap stocks that could amplify your portfolio’s returns and one best left ignored.
One Small-Cap Stock to Sell:
Sweetgreen (SG)
Market Cap: $817.5 million
Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE: SG) is a casual quick service chain known for its healthy salads and bowls.
Why Should You Sell SG?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- 11.5 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $6.75 per share, Sweetgreen trades at 441x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SG.
Two Small-Cap Stocks to Watch:
StepStone Group (STEP)
Market Cap: $4.24 billion
Operating as both an advisor and asset manager with over $100 billion in assets under management, StepStone Group (NASDAQ: STEP) is an investment firm that provides clients with access to private market investments across private equity, real estate, private debt, and infrastructure.
Why Is STEP Interesting?
- Annual revenue growth of 43% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share have massively outperformed its peers over the last two years, increasing by 41.7% annually
StepStone Group is trading at $52.86 per share, or 21.3x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Gulfport Energy (GPOR)
Market Cap: $3.48 billion
With drilling operations focused on the Utica Shale in eastern Ohio and the SCOOP play in central Oklahoma, Gulfport Energy (NYSE: GPOR) drills for and produces natural gas from underground shale formations.
Why Are We Fans of GPOR?
- Annual revenue growth of 7.2% over the last ten years was superb and indicates its market share increased during this cycle
- Highly-profitable operating model results in strong unit economics and a premier gross margin of 68.6%
- Robust free cash flow margin of 17.3% gives it many options for capital deployment
Gulfport Energy’s stock price of $192.60 implies a valuation ratio of 7.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
