Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.

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. That said, here is one small-cap stock that could amplify your portfolio’s returns and two best left ignored.

Two Small-Cap Stocks to Sell:

Zeta (ZETA)

Market Cap: $3.30 billion

Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE: ZETA) provides software and data analytics tools that help companies market their products to billions of customers.

Why Does ZETA Give Us Pause?

1. Gross margin of 60.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
2. Operating losses show it sacrificed profitability while scaling the business
3. Poor free cash flow margin of 9.8% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Zeta’s stock price of $13.92 implies a valuation ratio of 2.3x forward price-to-sales. To fully understand why you should be careful with ZETA, check out our full research report (it’s free).

MYR Group (MYRG)

Market Cap: $2.85 billion

Constructing electrical and phone lines in the American Midwest dating back to the 1890s, MYR Group (NASDAQ: MYRG) is a specialty contractor in the electrical construction industry.

Why Is MYRG Risky?

1. Sales pipeline suggests its future revenue growth likely won’t meet our standards as its backlog hasn’t budged over the past two years
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 34.5% annually while its revenue grew
3. Eroding returns on capital suggest its historical profit centers are aging

At $183.66 per share, MYR Group trades at 29.3x forward P/E. Check out our free in-depth research report to learn more about why MYRG doesn’t pass our bar.

One Small-Cap Stock to Buy:

Coastal Financial (CCB)

Market Cap: $1.53 billion

Pioneering the intersection of traditional banking and financial technology in the Pacific Northwest, Coastal Financial (NASDAQ: CCB) operates as a bank holding company that provides traditional banking services and Banking-as-a-Service (BaaS) solutions to consumers and businesses.

Why Are We Bullish on CCB?

1. Market share has increased this cycle as its 46% annual net interest income growth over the last four years was exceptional
2. Productivity and efficiency ratio profits are expected to increase next year as some fixed cost leverage kicks in
3. Earnings per share grew by 25.7% annually over the last five years, massively outpacing its peers

Coastal Financial is trading at $101.56 per share, or 3.1x forward P/B. Is now the time to initiate a position? 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-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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