2 small-cap stocks to keep an eye on and 1 we question

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 are two small-cap stocks that could be the next 100 baggers and one best left ignored.

One small-cap stock to sell:

Dine Brands (DIN)

Market cap: $439 million

Operating a franchise model, Dine Brands (NYSE:DIN) is a casual restaurant chain that owns the Applebee's and IHOP banners.

Why Do We Avoid DIN?

1. Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

2. Free cash flow margin dropped by 10.2 percentage points over the last year, implying the company became more capital intensive as competition picked up

3. 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

Dine Brands is trading at $34.75 per share, or 7.4x forward P/E. To fully understand why you should be careful with DIN, check out our full research report (it's free) .

Two small-cap stocks to watch:

Enpro (NPO)

Market cap: $5.94 billion

Holding a Guinness World Record for creating the world's largest gasket, Enpro (NYSE:NPO) designs, manufactures, and sells products used for machinery in various industries.

Why Does NPO Catch Our Eye?

1. Offerings are mission-critical for businesses and result in a stellar gross margin of 41.1%

2. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 15.9% annually

3. Robust free cash flow margin of 12.8% gives it many options for capital deployment

Enpro's stock price of $283.04 implies a valuation ratio of 27.3x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it's free .

Byrna (BYRN)

Market cap: $108.8 million

Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ:BYRN) is a provider of non-lethal weapons.

Why Are We Fans of BYRN?

1. Annual revenue growth of 18% over the past five years was outstanding, reflecting market share gains this cycle

2. Improving returns on capital suggest its past investments are beginning to deliver value

At $4.63 per share, Byrna trades at 1.4x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it's free .