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. 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:
Papa John's (PZZA)
Market Cap: $1.17 billion
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Do We Pass on PZZA?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Gross margin of 12.1% reflects the bad unit economics inherent in most restaurant businesses
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 3.6 percentage points
Papa John’s stock price of $36.09 implies a valuation ratio of 21.2x forward P/E. Check out our free in-depth research report to learn more about why PZZA doesn’t pass our bar.
Bark (BARK)
Market Cap: $147 million
Making a name for itself with the BarkBox, Bark (NYSE: BARK) specializes in subscription-based, personalized pet products.
Why Is BARK Risky?
- Lackluster 9.8% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $0.86 per share, Bark trades at 41.2x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than BARK.
One Small-Cap Stock to Buy:
QuinStreet (QNST)
Market Cap: $794 million
Founded during the dot-com era in 1999 and specializing in high-intent consumer traffic, QuinStreet (NASDAQ: QNST) operates digital performance marketplaces that connect clients in financial and home services with consumers actively searching for their products.
Why Is QNST a Top Pick?
- Impressive 40.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 320% over the last two years outstripped its revenue performance
- Free cash flow margin increased by 4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
QuinStreet is trading at $13.99 per share, or 11.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 9 Market-Beating Stocks. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
