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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. 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:
Commvault (CVLT)
Market Cap: $5.45 billion
Born from the need to create ironclad protection in an increasingly dangerous digital world, Commvault (NASDAQ: CVLT) provides data protection and cyber resilience software that helps organizations secure, back up, and recover their data across on-premises, hybrid, and multi-cloud environments.
Why Are We Hesitant About CVLT?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 12.2% underwhelmed
- Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue
- Operating margin dropped by 1.5 percentage points over the last year as the company focused on expansion rather than profitability
Commvault’s stock price of $130.34 implies a valuation ratio of 4.1x forward price-to-sales. Check out our free in-depth research report to learn more about why CVLT doesn’t pass our bar.
Merit Medical Systems (MMSI)
Market Cap: $5.16 billion
Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ: MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.
Why Does MMSI Give Us Pause?
- Subscale operations are evident in its revenue base of $1.58 billion, meaning it has fewer distribution channels than its larger rivals
- ROIC of 5.6% reflects management’s challenges in identifying attractive investment opportunities
At $85.64 per share, Merit Medical Systems trades at 20x forward P/E. If you’re considering MMSI for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
1st Source (SRCE)
Market Cap: $2.09 billion
Tracing its roots back to 1863 during the Civil War era, 1st Source Corporation (NASDAQ: SRCE) is a regional bank holding company that provides commercial, consumer, specialty finance, and wealth management services across Indiana, Michigan, and Florida.
Why Does SRCE Stand Out?
- Net interest margin increased by 68.5 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
- Share buybacks propelled its annual earnings per share growth to 17.3%, which outperformed its revenue gains over the last two years
- Annual tangible book value per share growth of 9.3% over the last five years was superb and indicates its capital strength increased during this cycle
1st Source is trading at $86.73 per share, or 1.5x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
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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.
