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 amplify your portfolio’s returns and two that may have trouble.
Two Small-Cap Stocks to Sell:
Kemper (KMPR)
Market Cap: $1.66 billion
Originally known as Unitrin until rebranding in 2011, Kemper (NYSE: KMPR) is an insurance holding company that provides automobile, homeowners, life, and other insurance products to individuals and businesses across the United States.
Why Should You Dump KMPR?
- Net premiums earned contracted by 1.8% annually over the last five years, showing unfavorable market dynamics this cycle
- Sales were less profitable over the last five years as its earnings per share fell by 17.5% annually, worse than its revenue declines
- Policy losses and capital returns have eroded its book value per share this cycle as its book value per share declined by 7.6% annually over the last five years
Kemper’s stock price of $28.21 implies a valuation ratio of 0.6x forward P/B. To fully understand why you should be careful with KMPR, check out our full research report (it’s free).
First Commonwealth Financial (FCF)
Market Cap: $2.16 billion
Tracing its roots back to the Great Depression era of 1934, First Commonwealth Financial (NYSE: FCF) is a financial holding company that provides consumer and commercial banking, wealth management, and insurance services across Pennsylvania and Ohio.
Why Does FCF Give Us Pause?
- Annual revenue growth of 5.7% over the last two years was below our standards for the banking sector
- Earnings per share fell by 1.6% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Anticipated tangible book value per share growth of 9.5% for the next year implies profitability will be modest
First Commonwealth Financial is trading at $21.35 per share, or 1.3x forward P/B. Check out our free in-depth research report to learn more about why FCF doesn’t pass our bar.
One Small-Cap Stock to Watch:
CRA (CRAI)
Market Cap: $1.14 billion
Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.
Why Could CRAI Be a Winner?
- Market share has increased this cycle as its 9.5% annual revenue growth over the last two years was exceptional
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $177.14 per share, CRA trades at 18.8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive 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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
