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. That said, here is one small-cap stock that could be the next 100 bagger and two that could be down big.
Two Small-Cap Stocks to Sell:
Sunrun (RUN)
Market Cap: $2.99 billion
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Why Does RUN Worry Us?
- Poor expense management has led to operating margin losses
- Cash-burning history makes us doubt the long-term viability of its business model
At $12.92 per share, Sunrun trades at 22.9x forward P/E. Check out our free in-depth research report to learn more about why RUN doesn’t pass our bar.
Darling Ingredients (DAR)
Market Cap: $9.06 billion
Turning what others consider waste into valuable resources, Darling Ingredients (NYSE: DAR) collects and transforms animal by-products, used cooking oil, and other bio-nutrients into valuable ingredients for food, feed, fuel, and industrial applications.
Why Is DAR Not Exciting?
- Products aren’t resonating with the market as its revenue declined by 3.2% annually over the last three years
- Easily substituted products (and therefore stiff competition) result in an inferior gross margin of 23.8% that must be offset through higher volumes
- Earnings per share have contracted by 25.6% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
Darling Ingredients’s stock price of $56.54 implies a valuation ratio of 11.2x forward P/E. If you’re considering DAR for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
SentinelOne (S)
Market Cap: $5.06 billion
Built on the principle of "fighting machine with machine," SentinelOne (NYSE: S) provides an AI-powered cybersecurity platform that autonomously prevents, detects, and responds to threats across endpoints, cloud workloads, and identity systems.
Why Are We Fans of S?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Projected revenue growth of 19.4% for the next 12 months suggests its momentum from the last two years will persist
- Free cash flow margin is forecasted to grow by 7.8 percentage points in the coming year, potentially giving the company more chips to play with
SentinelOne is trading at $14.88 per share, or 4x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
