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 be the next big thing and two that could be down big.
Two Small-Cap Stocks to Sell:
Sweetgreen (SG)
Market Cap: $1.08 billion
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 Are We Hesitant About SG?
- Poor expense management has led to operating margin losses
- 7.3 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $9.18 per share, Sweetgreen trades at 26.6x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SG.
Banner Bank (BANR)
Market Cap: $2.27 billion
Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ:BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.
Why Is BANR Not Exciting?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Net interest income trends were unexciting over the last five years as its 3.6% annual growth was below the typical banking firm
- Earnings per share fell by 7.9% annually over the last two years while its revenue was flat, showing each sale was less profitable
Banner Bank is trading at $65.52 per share, or 1.2x forward P/B. To fully understand why you should be careful with BANR, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
Verra Mobility (VRRM)
Market Cap: $3.85 billion
Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE:VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.
Why Is VRRM a Top Pick?
- Market share has increased this cycle as its 15.7% annual revenue growth over the last five years was exceptional
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 62.2%
- Strong free cash flow margin of 20.2% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
Verra Mobility’s stock price of $24.12 implies a valuation ratio of 17x forward P/E. 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
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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-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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