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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two best left ignored.
Two Small-Cap Stocks to Sell:
PVH (PVH)
Market Cap: $3.50 billion
Founded in 1881 by a husband and wife duo, PVH (NYSE:PVH) is a global fashion conglomerate with iconic brands like Calvin Klein and Tommy Hilfiger.
Why Do We Pass on PVH?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 7% for the last two years
- Stagnant returns on capital show management has failed to improve the company’s business quality
At $76.10 per share, PVH trades at 6.8x forward P/E. If you’re considering PVH for your portfolio, see our FREE research report to learn more.
Hamilton Insurance Group (HG)
Market Cap: $3.30 billion
Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group (NYSE:HG) operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.
Why Are We Hesitant About HG?
- Projected sales are flat for the next 12 months, implying demand will slow from its two-year trend
- Day-to-day expenses have swelled relative to revenue over the last two years as its pre-tax profit margin fell by 1.5 percentage points
- Performance over the past two years shows its incremental sales were less profitable, as its 14% annual earnings per share growth trailed its revenue gains
Hamilton Insurance Group’s stock price of $33.44 implies a valuation ratio of 1.1x forward P/B. Check out our free in-depth research report to learn more about why HG doesn’t pass our bar.
One Small-Cap Stock to Buy:
Palomar Holdings (PLMR)
Market Cap: $3.31 billion
Founded in 2013 to fill gaps in catastrophe insurance markets, Palomar Holdings (NASDAQ:PLMR) is a specialty insurance provider that offers property and casualty insurance products in underserved markets, with a focus on earthquake coverage.
Why Do We Love PLMR?
- Net premiums earned expanded by 56.8% annually over the last two years, demonstrating exceptional market penetration this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 42.9% annually
- Annual book value per share growth of 32.6% over the past two years was outstanding, reflecting strong capital accumulation this cycle
Palomar Holdings is trading at $125.88 per share, or 3.2x forward P/B. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.