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.
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. Keeping that in mind, 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:
EnerSys (ENS)
Market Cap: $8.73 billion
Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE: ENS) manufactures various kinds of batteries for a range of industries.
Why Are We Wary of ENS?
- Flat unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.3%
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 26.3%
EnerSys’s stock price of $233.58 implies a valuation ratio of 20x forward P/E. Dive into our free research report to see why there are better opportunities than ENS.
Radian Group (RDN)
Market Cap: $4.99 billion
Founded during the housing boom of 1977 and weathering multiple real estate cycles since, Radian Group (NYSE: RDN) provides mortgage insurance and real estate services, helping lenders manage risk and homebuyers achieve affordable homeownership.
Why Does RDN Fall Short?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Net premiums earned plateaued over the last five years, signaling weak incremental demand for its insurance policies
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 6.2% annually
Radian Group is trading at $37.57 per share, or 1x forward P/B. To fully understand why you should be careful with RDN, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
MYR Group (MYRG)
Market Cap: $7.14 billion
Constructing electrical and phone lines in the American Midwest dating back to the 1890s, MYR Group (NASDAQ: MYRG) is a specialty contractor in the electrical construction industry.
Why Is MYRG on Our Radar?
- Share buybacks catapulted its annual earnings per share growth to 32.6%, which outperformed its revenue gains over the last two years
- Free cash flow margin grew by 4.5 percentage points over the last five years, giving the company more chips to play with
- ROIC punches in at 15.6%, illustrating management’s expertise in identifying profitable investments
At $454.86 per share, MYR Group trades at 37.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
