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.
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 are two small-cap stocks that could be the next 100 baggers and one that could be down big.
One Small-Cap Stock to Sell:
OFG Bancorp (OFG)
Market Cap: $1.74 billion
Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE: OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands.
Why Does OFG Worry Us?
- 8.3% annual net interest income growth over the last five years was slower than its banking peers
- Projected net interest income decline of 2.2% for the next 12 months points to a tough demand environment ahead
- Net interest margin shrank by 77.8 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
OFG Bancorp is trading at $40.13 per share, or 1.2x forward P/B. Read our free research report to see why you should think twice about including OFG in your portfolio.
Two Small-Cap Stocks to Watch:
Upstart (UPST)
Market Cap: $2.69 billion
Using over 2,500 data variables and trained on nearly 82 million repayment events, Upstart (NASDAQ: UPST) is an AI-powered lending platform that uses machine learning to help banks and credit unions more accurately assess borrower risk for personal loans, auto loans, and home equity lines of credit.
Why Could UPST Be a Winner?
- Loan originations on its platform are soaring as they averaged 51.6% growth over the last year, enabling the company to collect more fees and expand into new markets like credit cards.
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Operating margin improvement of 31.2 percentage points over the last year demonstrates its ability to scale efficiently
Upstart’s stock price of $29.27 implies a valuation ratio of 2.2x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Piper Sandler (PIPR)
Market Cap: $5.39 billion
Tracing its roots back to 1895 and rebranded from Piper Jaffray in 2020, Piper Sandler (NYSE: PIPR) is an investment bank that provides advisory services, capital raising, institutional brokerage, and research for corporations, governments, and institutional investors.
Why Are We Backing PIPR?
- Impressive 18.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 38.3% annual growth in its earnings per share outpaced its revenue
- Balance sheet strength has increased this cycle as its 13.4% annual tangible book value per share growth over the last two years was exceptional
At $305.60 per share, Piper Sandler trades at 15.6x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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 meeting 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 (+1,326% 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.
