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. Keeping that in mind, here are two small-cap stocks that could amplify your portfolio’s returns and one that could be down big.
One Small-Cap Stock to Sell:
HNI (HNI)
Market Cap: $2.03 billion
With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE:HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.
Why Is HNI Not Exciting?
- Muted 4.9% annual revenue growth over the last five years shows its demand lagged behind its business services peers
- Estimated sales growth of 3.4% for the next 12 months implies demand will slow from its two-year trend
- 2.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
HNI’s stock price of $44.23 implies a valuation ratio of 11.9x forward P/E. To fully understand why you should be careful with HNI, check out our full research report (it’s free).
Two Small-Cap Stocks to Watch:
Globalstar (GSAT)
Market Cap: $3.19 billion
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ:GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Why Does GSAT Stand Out?
- Annual revenue growth of 16.3% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 55.5% annually, topping its revenue gains
- Robust free cash flow margin of 33.4% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
Globalstar is trading at $25.77 per share, or 44.6x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Magnite (MGNI)
Market Cap: $3.11 billion
Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ:MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.
Why Do We Love MGNI?
- Annual revenue growth of 33% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 22.8% outpaced its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
At $21.79 per share, Magnite trades at 23.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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 Exlservice (+354% 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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