1 Small-Cap Stock for Long-Term Investors and 2 We Turn Down

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 amplify your portfolio’s returns and two that could be down big.

Two Small-Cap Stocks to Sell:

Monarch (MCRI)

Market Cap: $1.80 billion

Established in 1993, Monarch (NASDAQ:MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Why Do We Think MCRI Will Underperform?

1. Annual revenue growth of 4.5% over the last two years was below our standards for the consumer discretionary sector
2. Free cash flow margin is expected to increase by 1.1 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
3. Rising returns on capital show management is making relatively better investments

Monarch is trading at $98.84 per share, or 17.3x forward P/E. Dive into our free research report to see why there are better opportunities than MCRI.

Ingram Micro (INGM)

Market Cap: $5.34 billion

Operating as the crucial link in the global technology supply chain with a presence in 57 countries, Ingram Micro (NYSE:INGM) is a global technology distributor that connects manufacturers with resellers, providing hardware, software, cloud services, and logistics expertise.

Why Are We Cautious About INGM?

1. Sizable revenue base leads to growth challenges as its 2.2% annual revenue increases over the last five years fell short of other business services companies
2. Earnings per share fell by 7.8% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
3. Low free cash flow margin of -0.1% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $22.70 per share, Ingram Micro trades at 7.3x forward P/E. Read our free research report to see why you should think twice about including INGM in your portfolio.

One Small-Cap Stock to Buy:

Pathward Financial (CASH)

Market Cap: $1.66 billion

Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ:CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.

Why Is CASH a Top Pick?

1. 13.6% annual net interest income growth over the last five years surpassed the sector average as its loans resonated with borrowers
2. Differentiated product suite is reflected in its Strong performance of its loan book results in a High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 7%
3. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.6% exceeded its revenue gains over the last five years

Pathward Financial’s stock price of $74.46 implies a valuation ratio of 1.7x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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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