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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, here are two small-cap stocks that could be the next 100 baggers and one that could be down big.
One Small-Cap Stock to Sell:
HighPeak Energy (HPK)
Market Cap: $1.08 billion
Operating in the oil-rich northeastern corner of the Midland Basin where Howard and Borden counties meet, HighPeak Energy (NASDAQ:HPK) explores for, develops, and produces crude oil, natural gas liquids, and natural gas.
Why Does HPK Fall Short?
- Modest revenue base of $893.8 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Expenses have increased as a percentage of revenue over the last five years as its EBITDA margin fell by 18.5 percentage points
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $8.43 per share, HighPeak Energy trades at 4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including HPK in your portfolio.
Two Small-Cap Stocks to Watch:
Cadre (CDRE)
Market Cap: $1.07 billion
Originally known as Safariland, Cadre (NYSE:CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Why Are We Positive on CDRE?
- Annual revenue growth of 13.5% over the last two years was superb and indicates its market share increased during this cycle
- Operating margin improvement of 6.7 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings per share have massively outperformed its peers over the last four years, increasing by 40.8% annually
Cadre’s stock price of $24.95 implies a valuation ratio of 17.9x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
First BanCorp (FBP)
Market Cap: $4.01 billion
Tracing its roots back to 1948 in San Juan, First BanCorp (NYSE:FBP) is a bank holding company that provides commercial banking, consumer financing, mortgage services, and insurance products across Puerto Rico, the U.S. mainland, and the Caribbean.
Why Do We Like FBP?
- Differentiated product suite leads to a best-in-class net interest margin of 4.8%
- Non-interest operating profits increased over the last five years as the firm gained some leverage on its fixed costs and became more efficient
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
First BanCorp is trading at $26.43 per share, or 2x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.