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 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:
Monarch (MCRI)
Market Cap: $1.80 billion
Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.
Why Do We Think MCRI Will Underperform?
- Annual revenue growth of 4.5% over the last two years was below our standards for the consumer discretionary sector
- Free cash flow margin is expected to increase by 1.1 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
- Rising returns on capital show management is making relatively better investments
Monarch is trading at $98.84 per share, or 17.3x forward P/E. Dive into our free research report to see why there are better opportunities than MCRI.
Ingram Micro (INGM)
Market Cap: $5.34 billion
Operating as the crucial link in the global technology supply chain with a presence in 57 countries, Ingram Micro (NYSE: INGM) is a global technology distributor that connects manufacturers with resellers, providing hardware, software, cloud services, and logistics expertise.
Why Are We Cautious About INGM?
- Sizable revenue base leads to growth challenges as its 2.2% annual revenue increases over the last five years fell short of other business services companies
- Earnings per share fell by 7.8% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Low free cash flow margin of -0.1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $22.70 per share, Ingram Micro trades at 7.3x forward P/E. Read our free research report to see why you should think twice about including INGM in your portfolio.
One Small-Cap Stock to Buy:
Pathward Financial (CASH)
Market Cap: $1.66 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 Is CASH a Top Pick?
- 13.6% annual net interest income growth over the last five years surpassed the sector average as its loans resonated with borrowers
- Differentiated product suite is reflected in its Strong performance of its loan book results in a High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 7%
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.6% exceeded its revenue gains over the last five years
Pathward Financial’s stock price of $74.46 implies a valuation ratio of 1.7x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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