Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
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 amplify your portfolio’s returns and two that could be down big.
One Small-Cap Stocks to Sell:
OneMain (OMF)
Market Cap: $6.79 billion
Dating back to 1912 and formerly known as Springleaf, OneMain Holdings (NYSE:OMF) provides personal loans, auto financing, and credit cards to nonprime consumers who have limited access to traditional banking services.
Why Are We Wary of OMF?
- Annual revenue growth of 5.3% over the last five years was below our standards for the financials sector
- Earnings per share fell by 5.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- 15× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $58.89 per share, OneMain trades at 8x forward P/E. Check out our free in-depth research report to learn more about why OMF doesn’t pass our bar.
One Small-Cap Stock to Watch:
Braze (BRZE)
Market Cap: $2.39 billion
With its technology powering interactions with 6.2 billion monthly active users across the digital landscape, Braze (NASDAQ:BRZE) provides a platform that helps brands build and maintain direct relationships with their customers through personalized, cross-channel messaging and engagement.
Why Are We Fans of BRZE?
- Billings growth has averaged 32.1% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Forecasted revenue growth of 18.8% for the next 12 months indicates its momentum over the last two years is sustainable
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
Braze is trading at $21.50 per share, or 2.7x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.