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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two that could be down big.

Two Small-Cap Stocks to Sell:

Richardson Electronics (RELL)

Market Cap: $167.5 million

Founded in 1947, Richardson Electronics (NASDAQ: RELL) is a distributor of power grid and microwave tubes as well as consumables related to those products.

Why Do We Steer Clear of RELL?

1. Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 2% declines over the past two years
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.4% for the last five years
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Richardson Electronics is trading at $11.70 per share, or 64.1x forward P/E. If you’re considering RELL for your portfolio, see our FREE research report to learn more.

Walker & Dunlop (WD)

Market Cap: $2.78 billion

Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.

Why Does WD Fall Short?

1. Annual net interest income declines of 56.7% for the past five years show its loan book struggled during this cycle
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 6.9% annually while its revenue grew
3. Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 4.5% annually over the last five years

At $81.48 per share, Walker & Dunlop trades at 1.5x forward P/B. Read our free research report to see why you should think twice about including WD in your portfolio.

One Small-Cap Stock to Watch:

Sallie Mae (SLM)

Market Cap: $5.32 billion

Originally created as a government-sponsored enterprise before privatizing in 2004, Sallie Mae (NASDAQ: SLM) is a financial services company that provides private education loans, savings products, and educational resources to help students and families pay for college.

Why Are We Positive On SLM?

1. Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 19.8% annually
2. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

Sallie Mae’s stock price of $25.50 implies a valuation ratio of 7.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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