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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, 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:
Helios (HLIO)
Market Cap: $2.55 billion
Founded on the principle of treating others as one wants to be treated, Helios (NYSE: HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Why Do We Steer Clear of HLIO?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 8.4 percentage points
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Helios is trading at $77.05 per share, or 26.2x forward P/E. Check out our free in-depth research report to learn more about why HLIO doesn’t pass our bar.
Main Street Capital (MAIN)
Market Cap: $4.69 billion
With a focus on building long-term partnerships rather than quick transactions, Main Street Capital (NYSE: MAIN) is a business development company that provides long-term debt and equity capital to lower middle market and middle market companies.
Why Does MAIN Fall Short?
- Sales trends were unexciting over the last two years as its 5.5% annual growth was below the typical financials company
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 3% annually
- 6.4% annual tangible book value per share growth over the last two years was slower than its financials peers
At $50.68 per share, Main Street Capital trades at 13x forward P/E. To fully understand why you should be careful with MAIN, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
WisdomTree (WT)
Market Cap: $2.91 billion
Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.
Why Is WT a Top Pick?
- Impressive 22.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share buybacks catapulted its annual earnings per share growth to 52%, which outperformed its revenue gains over the last two years
- Industry-leading 15.2% return on equity demonstrates management’s skill in finding high-return investments
WisdomTree’s stock price of $19.25 implies a valuation ratio of 16.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
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 meeting 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
