1 Small-Cap Stock on Our Buy List and 2 Facing Challenges

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

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 big thing and two that could be down big.

Two Small-Cap Stocks to Sell:

CarGurus (CARG)

Market Cap: $3.72 billion

Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.

Why Does CARG Worry Us?

1. Sales tumbled by 15.1% annually over the last three years, showing consumer trends are working against its favor
2. May need to improve its platform and marketing strategy as its 1.7% average growth in paying dealers underwhelmed
3. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3.4%

CarGurus is trading at $37.50 per share, or 11.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than CARG.

DigitalBridge (DBRG)

Market Cap: $2.15 billion

Transforming from a traditional real estate investor to a digital-focused powerhouse in 2021, DigitalBridge Group (NYSE:DBRG) is a global digital infrastructure investment firm that manages capital and operates assets across data centers, cell towers, fiber networks, and edge infrastructure.

Why Does DBRG Give Us Pause?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 21.7% annually over the last five years
2. Below-average return on equity indicates management struggled to find compelling investment opportunities

At $11.60 per share, DigitalBridge trades at 1.2x forward P/E. Read our free research report to see why you should think twice about including DBRG in your portfolio.

One Small-Cap Stock to Buy:

Nicolet Bankshares (NIC)

Market Cap: $1.99 billion

Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE:NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.

Why Should You Buy NIC?

1. Impressive 18.4% annual net interest income growth over the last five years indicates it’s winning market share this cycle
2. Net interest margin increased by 40.3 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
3. Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 14.9% annually

Nicolet Bankshares’s stock price of $134.17 implies a valuation ratio of 1.6x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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