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 that may have trouble.
Two Small-Cap Stocks to Sell:
Q2 Holdings (QTWO)
Market Cap: $3.66 billion
With a platform powering digital services for approximately 25 million account holders across America, Q2 Holdings (NYSE: QTWO) provides cloud-based digital solutions that help financial institutions, fintechs, and alternative finance companies deliver modern banking experiences to their customers.
Why Are We Hesitant About QTWO?
- Average billings growth of 7.7% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its two-year trend
- Sky-high servicing costs result in an inferior gross margin of 57% that must be offset through increased usage
Q2 Holdings’s stock price of $58.89 implies a valuation ratio of 4.1x forward price-to-sales. Read our free research report to see why you should think twice about including QTWO in your portfolio.
Perella Weinberg (PWP)
Market Cap: $1.13 billion
Founded in 2006 by veteran investment bankers Joseph Perella and Peter Weinberg during a wave of boutique advisory firm launches, Perella Weinberg Partners (NASDAQ: PWP) is a global independent advisory firm that provides strategic and financial advice to corporations, financial sponsors, and government institutions.
Why Do We Avoid PWP?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.3% annually over the last five years
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
At $15.21 per share, Perella Weinberg trades at 12.9x forward P/E. Dive into our free research report to see why there are better opportunities than PWP.
One Small-Cap Stock to Watch:
WEX (WEX)
Market Cap: $5.94 billion
Originally founded in 1983 as Wright Express to serve the fleet card market, WEX (NYSE: WEX) provides payment processing and business solutions across fleet management, employee benefits, and corporate payments sectors.
Why Could WEX Be a Winner?
- Share repurchases over the last five years enabled its annual earnings per share growth of 20.6% to outpace its revenue gains
- ROE punches in at 18.2%, illustrating management’s expertise in identifying profitable investments
WEX is trading at $172.30 per share, or 8.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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.
