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 be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
Marcus & Millichap (MMI)
Market Cap: $1.17 billion
Founded in 1971, Marcus & Millichap (NYSE: MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Are We Bearish on MMI?
- Sales tumbled by 1.5% annually over the last five years, showing consumer trends are working against it
- Free cash flow margin is forecasted to shrink by 7.3 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Marcus & Millichap is trading at $30.93 per share, or 47.1x forward P/E. Read our free research report to see why you should think twice about including MMI in your portfolio.
Robert Half (RHI)
Market Cap: $3.78 billion
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE: RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Do We Avoid RHI?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Sales over the last five years were less profitable as its earnings per share fell by 21.3% annually while its revenue was flat
- Eroding returns on capital suggest its historical profit centers are aging
At $37.60 per share, Robert Half trades at 22.9x forward P/E. To fully understand why you should be careful with RHI, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
NerdWallet (NRDS)
Market Cap: $545.3 million
Born from founder Tim Chen's frustration with the lack of transparent credit card information when helping his sister in 2009, NerdWallet (NASDAQ: NRDS) is a digital platform that provides financial guidance to help consumers and small businesses make smarter decisions about credit cards, loans, insurance, and other financial products.
Why Do We Love NRDS?
- Annual revenue growth of 24.3% over the last five years was superb and indicates its market share increased during this cycle
- Share buybacks catapulted its annual earnings per share growth to 195%, which outperformed its revenue gains over the last two years
NerdWallet’s stock price of $8.61 implies a valuation ratio of 5.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
