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. That said, here are two small-cap stocks that could be the next big thing and one best left ignored.

One Small-Cap Stock to Sell:

YETI (YETI)

Market Cap: $2.89 billion

Founded by two brothers from Texas, YETI (NYSE: YETI) specializes in durable outdoor goods including coolers, drinkware, and other gear tailored to adventure enthusiasts.

Why Does YETI Give Us Pause?

1. Annual revenue growth of 6.3% over the last two years was below our standards for the consumer discretionary sector
2. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 2.4 percentage points over the next year
3. Waning returns on capital imply its previous profit engines are losing steam

YETI is trading at $35.58 per share, or 14.4x forward P/E. If you’re considering YETI for your portfolio, see our FREE research report to learn more.

Two Small-Cap Stocks to Watch:

JFrog (FROG)

Market Cap: $5.64 billion

Named after the amphibian that continuously evolves from egg to tadpole to adult, JFrog (NASDAQ: FROG) provides a platform that helps organizations securely create, store, manage, and distribute software packages across any system.

Why Do We Like FROG?

1. Market share has increased as its 23.3% annual revenue growth over the last two years was exceptional
2. Average billings growth of 26.1% over the last year enhances its liquidity and shows there is steady demand for its products
3. User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs

At $48.69 per share, JFrog trades at 10.2x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Pathward Financial (CASH)

Market Cap: $1.62 billion

Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ: CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.

Why Will CASH Outperform?

1. Annual net interest income growth of 14% over the past five years was outstanding, reflecting market share gains this cycle
2. Differentiated product suite leads to a Strong performance of its loan book leads to a High-yielding loan book and low cost of funds result in a best-in-class net interest margin of 7%
3. Share repurchases over the last two years enabled its annual earnings per share growth of 15.7% to outpace its revenue gains

Pathward Financial’s stock price of $70.50 implies a valuation ratio of 1.6x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 Comfort Systems (+782% 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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