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.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here is one small-cap stock that could be the next big thing and two that could be down big.
Two Small-Cap Stocks to Sell:
Manhattan Associates (MANH)
Market Cap: $8.3 billion
Built on a "versionless" cloud architecture that delivers quarterly updates to all customers, Manhattan Associates (NASDAQ: MANH) develops cloud-based software that helps retailers, wholesalers, and manufacturers manage their supply chains, inventory, and omnichannel operations.
Why Is MANH Not Exciting?
- Offerings struggled to generate meaningful interest as its average billings growth of 5.8% over the last year did not impress
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 56%, one of the worst among software companies
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
At $143.91 per share, Manhattan Associates trades at 7.3x forward price-to-sales. If you’re considering MANH for your portfolio, see our FREE research report to learn more.
ManpowerGroup (MAN)
Market Cap: $1.58 billion
Founded during the post-World War II economic boom when businesses needed temporary workers, ManpowerGroup (NYSE: MAN) connects millions of people to employment opportunities through its global network of staffing, recruitment, and workforce management services.
Why Should You Sell MAN?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Earnings per share fell by 17.5% annually over the last five years while its revenue was flat, showing each sale was less profitable
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
ManpowerGroup is trading at $33.36 per share, or 8.9x forward P/E. Read our free research report to see why you should think twice about including MAN in your portfolio.
One Small-Cap Stock to Buy:
SM Energy (SM)
Market Cap: $7.50 billion
Operating across three key regions with over 328,000 net acres under its control, SM Energy (NYSE: SM) explores for, develops, and produces oil, natural gas, and natural gas liquids primarily from shale formations in Texas and Utah.
Why Are We Backing SM?
- Market share has increased this cycle as its 25.5% annual revenue growth over the last five years was exceptional
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 87.2%
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
SM Energy’s stock price of $28.54 implies a valuation ratio of 3.9x forward P/E. Is now the time to initiate a position? Find out in our full 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
