2 Small-Cap Stocks on Our Watchlist and 1 We Find Risky

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.

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 are two small-cap stocks that could amplify your portfolio’s returns and one best left ignored.

One Small-Cap Stock to Sell:

Carter's (CRI)

Market Cap: $1.22 billion

Rumored to sell more than 10 products for every child born in the United States, Carter's (NYSE:CRI) is an American designer and marketer of children's apparel.

Why Do We Steer Clear of CRI?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
2. Poor free cash flow margin of 6.5% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $32.74 per share, Carter's trades at 14.7x forward P/E. Check out our free in-depth research report to learn more about why CRI doesn’t pass our bar.

Two Small-Cap Stocks to Watch:

Euronet Worldwide (EEFT)

Market Cap: $3.26 billion

Operating a global network of over 47,000 ATMs and 821,000 point-of-sale terminals across more than 60 countries, Euronet Worldwide (NASDAQ:EEFT) provides electronic payment solutions including ATM services, prepaid product processing, and international money transfer services.

Why Are We Backing EEFT?

1. 11.1% annual revenue growth over the last five years surpassed the sector average as its products resonated with customers
2. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Stellar return on equity showcases management’s ability to surface highly profitable business ventures

Euronet Worldwide is trading at $77.47 per share, or 6.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

Dave (DAVE)

Market Cap: $2.66 billion

Named after the biblical David fighting financial Goliaths, Dave (NASDAQ:DAVE) is a digital financial services platform that helps Americans living paycheck to paycheck with cash advances, banking services, and tools to improve their financial health.

Why Are We Fans of DAVE?

1. Market share has increased this cycle as its 41.4% annual revenue growth over the last two years was exceptional
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 137% annually, topping its revenue gains

Dave’s stock price of $198.28 implies a valuation ratio of 14.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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 Tecnoglass (+1,754% 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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