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 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:
REV Group (REVG)
Market Cap: $2.23 billion
Offering the first full-electric North American fire truck, REV (NYSE: REVG) manufactures and sells specialty vehicles.
Why Is REVG Not Exciting?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- High input costs result in an inferior gross margin of 12% that must be offset through higher volumes
- Poor expense management has led to an operating margin of 3% that is below the industry average
REV Group is trading at $45.78 per share, or 16.4x forward P/E. To fully understand why you should be careful with REVG, check out our full research report (it’s free).
Two Small-Cap Stocks to Watch:
Upwork (UPWK)
Market Cap: $1.79 billion
Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ: UPWK) is an online platform where businesses and independent professionals connect to get work done.
Why Do We Like UPWK?
- Monetization efforts are paying off as its average revenue per customer has grown by 8.3% annually over the last two years
- Additional sales over the last three years increased its profitability as the 395% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 27 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Upwork’s stock price of $13.62 implies a valuation ratio of 10.2x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Republic Bancorp (RBCAA)
Market Cap: $1.42 billion
With roots dating back to 1974 and operating across multiple states including Kentucky, Indiana, Florida, Ohio, and Tennessee, Republic Bancorp (NASDAQGS:RBCA.A) is a Kentucky-based financial holding company that operates a bank offering traditional banking, mortgage services, and specialized financial products.
Why Are We Positive On RBCAA?
- Annual revenue growth of 10.3% over the past two years was outstanding, reflecting market share gains this cycle
- Differentiated product suite results in a Strong performance of its loan book is reflected in its High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 5%
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 13.2% over the last two years outstripped its revenue performance
At $72.97 per share, Republic Bancorp trades at 1.3x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. 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
