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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
ACV Auctions (ACVA)
Market Cap: $1.31 billion
Founded in 2014, ACV Auctions (NYSE:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Does ACVA Fall Short?
- High servicing costs result in an inferior gross margin of 27.3% that must be offset through higher volumes
- Highly competitive market means it’s on the never-ending treadmill of sales and marketing spend
ACV Auctions is trading at $7.49 per share, or 14.1x forward EV/EBITDA. Read our free research report to see why you should think twice about including ACVA in your portfolio.
American Eagle (AEO)
Market Cap: $2.88 billion
With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.
Why Are We Cautious About AEO?
- Muted 3.8% annual revenue growth over the last three years shows its demand lagged behind its consumer retail peers
- Slow expansion of stores indicates a strategic shift toward maximizing returns from existing locations
- Underwhelming 7.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
American Eagle’s stock price of $17.10 implies a valuation ratio of 9.6x forward P/E. To fully understand why you should be careful with AEO, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
Huron (HURN)
Market Cap: $2.41 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.
What Makes HURN Stand Out?
- Market share has increased this cycle as its 16.4% annual revenue growth over the last five years was exceptional
- Share buybacks catapulted its annual earnings per share growth to 23%, which outperformed its revenue gains over the last two years
- Free cash flow margin grew by 7.6 percentage points over the last five years, giving the company more chips to play with
At $151.77 per share, Huron trades at 15.8x forward P/E. Is now a good time to buy? See for yourself 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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.