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.
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 amplify your portfolio’s returns and two that could be down big.
Two Small-Cap Stocks to Sell:
Ameresco (AMRC)
Market Cap: $1.26 billion
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.
Why Are We Wary of AMRC?
- Issuance of new shares over the last five years caused its earnings per share to fall by 15.7% annually while its revenue grew
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Ameresco is trading at $23.63 per share, or 16.6x forward P/E. If you’re considering AMRC for your portfolio, see our FREE research report to learn more.
Addus HomeCare (ADUS)
Market Cap: $2.14 billion
Serving approximately 66,000 clients across 22 states with a focus on "dual eligible" Medicare and Medicaid beneficiaries, Addus HomeCare (NASDAQ: ADUS) provides in-home personal care, hospice, and home health services to elderly, chronically ill, and disabled individuals.
Why Is ADUS Not Exciting?
- Smaller revenue base of $1.48 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Free cash flow margin was stuck in limbo over the last five years
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
At $117.23 per share, Addus HomeCare trades at 16.4x forward P/E. Read our free research report to see why you should think twice about including ADUS in your portfolio.
One Small-Cap Stock to Buy:
Tidewater (TDW)
Market Cap: $4.63 billion
Operating one of the world's largest fleets with over 200 vessels spanning 30 countries, Tidewater (NYSE: TDW) operates offshore service vessels that transport supplies, equipment, and workers to oil rigs and platforms.
Why Should You Buy TDW?
- Market share has increased this cycle as its 30.8% annual revenue growth over the last five years was exceptional
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Robust free cash flow margin of 14.7% gives it many options for capital deployment
Tidewater’s stock price of $93.01 implies a valuation ratio of 17.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
