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. Keeping that in mind, here is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
KBR (KBR)
Market Cap: $4.74 billion
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Why Does KBR Worry Us?
- Annual revenue growth of 3.8% over the last two years was below our standards for the industrials sector
- Flat backlog over the past two years has disappointed and shows fewer customers signed long-term contracts
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 5.1% for the last five years
KBR’s stock price of $37.56 implies a valuation ratio of 8.8x forward P/E. Dive into our free research report to see why there are better opportunities than KBR.
Rumble (RUM)
Market Cap: $2.48 billion
Founded in 2013 as a champion for content creator rights and free expression, Rumble (NASDAQ: RUM) is a video sharing platform that positions itself as a free speech alternative to mainstream platforms, offering creators more favorable revenue-sharing opportunities.
Why Do We Think Twice About RUM?
- Subscale operations are evident in its revenue base of $102.4 million, meaning it has fewer distribution channels than its larger rivals (but more room for growth)
- Cash burn makes us question whether it can achieve sustainable long-term growth
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
Rumble is trading at $6.21 per share, or 15.8x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including RUM in your portfolio.
One Small-Cap Stock to Buy:
HCI Group (HCI)
Market Cap: $2.31 billion
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
What Makes HCI Stand Out?
- Strong 15.5% annualized net premiums earned expansion over the last two years shows it’s capturing market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 36.3% over the last two years outstripped its revenue performance
- Annual book value per share growth of 42.4% over the past two years was outstanding, reflecting strong capital accumulation this cycle
At $180.67 per share, HCI Group trades at 1.8x forward P/B. Is now the right time to buy? See for yourself in our comprehensive 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.
