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 amplify your portfolio’s returns and two that could be down big.

Two Small-Cap Stocks to Sell:

Floor And Decor (FND)

Market Cap: $6.34 billion

Operating large, warehouse-style stores, Floor & Decor (NYSE: FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.

Why Does FND Give Us Pause?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
2. Subpar operating margin of 5.7% constrains its ability to invest in process improvements or effectively respond to new competitive threats
3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam

Floor And Decor is trading at $60.01 per share, or 29.7x forward P/E. Check out our free in-depth research report to learn more about why FND doesn’t pass our bar.

American Outdoor Brands (AOUT)

Market Cap: $83.53 million

Spun off from Smith and Wesson in 2020, American Outdoor Brands (NASDAQ: AOUT) is an outdoor and recreational products company that offers outdoor and shooting sports products but does not sell firearms themselves.

Why Is AOUT Risky?

1. Annual revenue growth of 2.6% over the last five years was below our standards for the consumer discretionary sector
2. Earnings per share have contracted by 34.3% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

American Outdoor Brands’s stock price of $6.73 implies a valuation ratio of 62.9x forward P/E. Read our free research report to see why you should think twice about including AOUT in your portfolio.

One Small-Cap Stock to Watch:

PJT (PJT)

Market Cap: $4.09 billion

Spun off from Blackstone in 2015 and founded by former Morgan Stanley executive Paul J. Taubman, PJT Partners (NYSE: PJT) is an advisory-focused investment bank that provides strategic advice, restructuring services, and fundraising solutions to corporations, boards, and investment firms.

Why Is PJT on Our Radar?

1. Annual revenue growth of 22.4% over the past two years was outstanding, reflecting market share gains this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 36.8% over the last two years outstripped its revenue performance
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

At $168.27 per share, PJT trades at 23.5x forward P/E. Is now the time to initiate a position? 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 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 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.