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. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two that could be down big.
Two Small-Cap Stocks to Sell:
Kulicke and Soffa (KLIC)
Market Cap: $3.11 billion
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Why Do We Pass on KLIC?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Efficiency has decreased over the last five years as its operating margin fell by 27.7 percentage points
- Earnings per share fell by 26.9% annually over the last five years while its revenue was flat, showing each sale was less profitable
At $59.67 per share, Kulicke and Soffa trades at 37.7x forward P/E. Check out our free in-depth research report to learn more about why KLIC doesn’t pass our bar.
Radian Group (RDN)
Market Cap: $4.54 billion
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Why Are We Wary of RDN?
- Net premiums earned contracted by 3.2% annually over the last five years, showing unfavorable market dynamics this cycle
- Operational productivity has decreased over the last two years as its combined ratio worsened by 13.7 percentage points
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 2.2% annually
Radian Group is trading at $33.49 per share, or 0.9x forward P/B. If you’re considering RDN for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
Huron (HURN)
Market Cap: $2.82 billion
Founded in 2002 during a time of significant regulatory change in corporate America, Huron Consulting Group (NASDAQ: HURN) is a professional services company that helps organizations develop growth strategies, optimize operations, and implement digital transformation solutions.
Why Are We Backing HURN?
- Market share has increased this cycle as its 12.3% annual revenue growth over the last five years was exceptional
- Free cash flow margin increased by 9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Huron’s stock price of $176.41 implies a valuation ratio of 21.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.
