1 Small-Cap Stock with Exciting Potential and 2 We Find Risky
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 is one small-cap stock that could amplify your portfolio’s returns and two best left ignored.
Two Small-Cap Stocks to Sell:
Whirlpool (WHR)
Market Cap: $2.08 billion
Credited with introducing the first automatic washing machine, Whirlpool (NYSE:WHR) is a manufacturer of a variety of home appliances.
Why Do We Think WHR Will Underperform?
- Annual sales declines of 7.3% for the past five years show its products and services struggled to connect with the market during this cycle
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 38.4% annually, worse than its revenue
At $32.07 per share, Whirlpool trades at 9.8x forward P/E. If you’re considering WHR for your portfolio, see our FREE research report to learn more.
Centrus Energy (LEU)
Market Cap: $2.97 billion
Operating the only active U.S. facility licensed to produce high-assay low-enriched uranium (HALEU) for next-generation reactors, Centrus Energy (NYSE:LEU) supplies enriched uranium, the fissile component needed to produce fuel for nuclear power reactors.
Why Do We Pass on LEU?
- Smaller revenue base of $473.9 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Costly operations and weak unit economics result in an inferior gross margin of 32.3% that must be offset through higher production volumes
- Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 46.1 percentage points
Centrus Energy is trading at $145.88 per share, or 44.5x forward P/E. Check out our free in-depth research report to learn more about why LEU doesn’t pass our bar.
One Small-Cap Stock to Watch:
AZZ (AZZ)
Market Cap: $3.99 billion
Responsible for projects like nuclear facilities, AZZ (NYSE:AZZ) is a provider of metal coating and power infrastructure solutions.
Why Are We Positive on AZZ?
- Annual revenue growth of 17.3% over the last five years was superb and indicates its market share increased during this cycle
- Healthy operating margin of 15.5% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 17.5% annually
AZZ’s stock price of $132.72 implies a valuation ratio of 18.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.