Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
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. That said, here is one small-cap stock that could amplify your portfolio’s returns and two best left ignored.
Two Small-Cap Stocks to Sell:
Gap (GAP)
Market Cap: $8.02 billion
Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap (NYSE: GAP) is an apparel and accessories retailer selling casual clothing to men, women, and children.
Why Does GAP Give Us Pause?
- Store closures and disappointing same-store sales suggest demand is sluggish and it’s rightsizing its operations
- Same-store sales growth averaged 2% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Gap is trading at $22.91 per share, or 9.3x forward P/E. To fully understand why you should be careful with GAP, check out our full research report (it’s free).
Kemper (KMPR)
Market Cap: $1.47 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 Are We Out on KMPR?
- Net premiums earned contracted by 3.3% annually over the last five years, showing unfavorable market dynamics this cycle
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Book value per share tumbled by 11.3% annually over the last five years, showing insurance sector trends are working against it during this cycle
At $25 per share, Kemper trades at 0.7x forward P/B. If you’re considering KMPR for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
AAON (AAON)
Market Cap: $6.82 billion
Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Should AAON Be on Your Watchlist?
- Sales pipeline is in good shape as its backlog averaged 93.5% growth over the past two years
- Notable projected revenue growth of 27.2% for the next 12 months hints at market share gains
- ROIC punches in at 17.4%, illustrating management’s expertise in identifying profitable investments
AAON’s stock price of $83.07 implies a valuation ratio of 31.3x forward P/E. Is now a good time to buy? Find out in our full 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 meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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.
