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 be the next big thing and two that could be down big.
Two Small-Cap Stocks to Sell:
CarMax (KMX)
Market Cap: $8.40 billion
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States.
Why Should You Sell KMX?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Gross margin of 10.8% is an output of its commoditized inventory
CarMax is trading at $56.48 per share, or 14.2x forward P/E. Dive into our free research report to see why there are better opportunities than KMX.
Amentum (AMTM)
Market Cap: $6.17 billion
With operations spanning approximately 80 countries and a workforce of specialized engineers and technical experts, Amentum Holdings (NYSE:AMTM) provides advanced engineering and technology solutions to U.S. government agencies, allied governments, and commercial enterprises across defense, energy, and space sectors.
Why Is AMTM Not Exciting?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.8% for the last two years
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Low free cash flow margin of 1.9% for the last four years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Amentum’s stock price of $25.53 implies a valuation ratio of 11.2x forward P/E. To fully understand why you should be careful with AMTM, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Dycom (DY)
Market Cap: $7.95 billion
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Why Could DY Be a Winner?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 10.1% annual sales growth over the last two years
- Exciting sales outlook for the upcoming 12 months calls for 14% growth, an acceleration from its two-year trend
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 27.2% exceeded its revenue gains over the last five years
At $273.29 per share, Dycom trades at 29.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
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