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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
H&R Block (HRB)
Market Cap: $4.26 billion
Founded in 1955 by brothers Henry W. Bloch and Richard A. Bloch, H&R Block (NYSE: HRB) is a tax preparation company offering professional tax assistance and financial solutions to individuals and small businesses.
Why Is HRB Risky?
- Muted 5.6% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Eroding returns on capital suggest its historical profit centers are aging
At $33.84 per share, H&R Block trades at 1.1x forward price-to-sales. If you’re considering HRB for your portfolio, see our FREE research report to learn more.
Donnelley Financial Solutions (DFIN)
Market Cap: $1.26 billion
Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE: DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements.
Why Does DFIN Give Us Pause?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3% annually over the last five years
Donnelley Financial Solutions’s stock price of $47.44 implies a valuation ratio of 11.3x forward P/E. Dive into our free research report to see why there are better opportunities than DFIN.
One Small-Cap Stock to Buy:
Kinsale Capital Group (KNSL)
Market Cap: $9.55 billion
Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE: KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.
Why Should You Buy KNSL?
- Market penetration was impressive this cycle as its net premiums earned expanded by 23.8% annually over the last two years
- Impressive 41.8% annual book value per share growth over the last two years indicates it’s building equity value this cycle
- Book value per share outlook for the upcoming 12 months is outstanding and shows it’s on track to build significant equity value
Kinsale Capital Group is trading at $413.36 per share, or 4.8x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
