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.
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. That said, here is one small-cap stock that could be the next 100 bagger and two that may have trouble.
Two Small-Cap Stocks to Sell:
Power Integrations (POWI)
Market Cap: $1.75 billion
A leading supplier of parts for electronics such as home appliances, Power Integrations (NASDAQ: POWI) is a semiconductor designer and developer specializing in products used for high-voltage power conversion.
Why Is POWI Risky?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.8%
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 22.1 percentage points
At $31.98 per share, Power Integrations trades at 27.5x forward P/E. If you’re considering POWI for your portfolio, see our FREE research report to learn more.
Matson (MATX)
Market Cap: $3.23 billion
Founded by a Swedish orphan, Matson (NYSE: MATX) is a provider of ocean transportation and logistics services.
Why Is MATX Not Exciting?
- Annual revenue growth of 4.3% over the last two years was below our standards for the industrials sector
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.3 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Matson’s stock price of $103.59 implies a valuation ratio of 9.4x forward P/E. Check out our free in-depth research report to learn more about why MATX doesn’t pass our bar.
One Small-Cap Stock to Buy:
BellRing Brands (BRBR)
Market Cap: $3.50 billion
Spun out of Post Holdings in 2019, Bellring Brands (NYSE: BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
Why Will BRBR Outperform?
- Products are flying off the shelves as its unit sales averaged 20% growth over the past two years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.4% exceeded its revenue gains over the last three years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
BellRing Brands is trading at $28.68 per share, or 11.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 6 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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