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 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
QCR Holdings (QCRH)
Market Cap: $1.59 billion
With roots dating back to 1993 and a name reflecting its original Quad Cities market, QCR Holdings (NASDAQGM:QCRH) operates four community banks across Iowa and Missouri, providing commercial, consumer banking, and trust services to businesses and individuals.
Why Are We Cautious About QCRH?
- Muted 9.1% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Estimated net interest income growth of 4.3% for the next 12 months implies demand will slow from its five-year trend
- Day-to-day expenses have swelled relative to revenue over the last five years as its efficiency ratio increased by 2.3 percentage points
QCR Holdings’s stock price of $97.40 implies a valuation ratio of 1.3x forward P/B. Read our free research report to see why you should think twice about including QCRH in your portfolio.
Kosmos Energy (KOS)
Market Cap: $1.63 billion
Operating in some of the world's deepest waters with projects located up to 120 kilometers offshore, Kosmos Energy (NYSE: KOS) explores for, develops, and produces oil and natural gas from deepwater offshore fields.
Why Does KOS Give Us Pause?
- Revenue base of $1.37 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Expenses have increased as a percentage of revenue over the last five years as its EBITDA margin fell by 11.9 percentage points
- Cash burn makes us question whether it can achieve sustainable long-term growth
At $2.73 per share, Kosmos Energy trades at 8.9x forward P/E. Check out our free in-depth research report to learn more about why KOS doesn’t pass our bar.
One Small-Cap Stock to Watch:
Patterson-UTI (PTEN)
Market Cap: $3.93 billion
Operating 135 Tier-1 super-spec rigs that can handle the industry's most demanding drilling projects, Patterson-UTI (NASDAQ: PTEN) provides contract drilling rigs, hydraulic fracturing, and drill bits to oil and gas operators.
Why Does PTEN Stand Out?
- Annual revenue growth of 12.5% over the last ten years was superb and indicates its market share increased during this cycle
- $4.66 billion in revenue gives it scale, which leads to bargaining power with suppliers and retailers
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
Patterson-UTI is trading at $10.45 per share, or 5.2x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
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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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
