Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
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 is one small-cap stock that could amplify your portfolio’s returns and two that may have trouble.
Two Small-Cap Stocks to Sell:
Wolverine Worldwide (WWW)
Market Cap: $2.33 billion
Founded in 1883, Wolverine Worldwide (NYSE: WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
Why Is WWW Risky?
- Annual sales declines of 1.6% for the past five years show its products and services struggled to connect with the market
- Sales were less profitable over the last five years as its earnings per share fell by 5.3% annually, worse than its revenue declines
- Push for growth has led to negative returns on capital, signaling value destruction, and its decreasing returns suggest its historical profit centers are aging
At $28.71 per share, Wolverine Worldwide trades at 22.8x forward P/E. To fully understand why you should be careful with WWW, check out our full research report (it’s free).
Rush Enterprises (RUSHA)
Market Cap: $4.38 billion
Headquartered in Texas, Rush Enterprises (NASDAQ: RUSH.A) provides truck-related services and solutions, including sales, leasing, parts, and maintenance for commercial vehicles.
Why Are We Wary of RUSHA?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Sales are projected to be flat over the next 12 months and imply weak demand
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Rush Enterprises’s stock price of $56.37 implies a valuation ratio of 14.3x forward EV-to-EBITDA. If you’re considering RUSHA for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
BILL (BILL)
Market Cap: $4.17 billion
Transforming the messy back-office financial operations that plague small business owners, BILL (NYSE: BILL) provides a cloud-based platform that automates accounts payable, accounts receivable, and expense management for small and midsize businesses.
Why Do We Like BILL?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 15.3% over the last year
- Superior software functionality and low servicing costs are reflected in its stellar gross margin of 84.5%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
BILL is trading at $40.50 per share, or 2.6x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 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 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 Exlservice (+354% 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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