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.
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. 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:
EnerSys (ENS)
Market Cap: $4.98 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 Is ENS Not Exciting?
- Declining unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.6%
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 26.1%
At $131.37 per share, EnerSys trades at 12.3x forward P/E. To fully understand why you should be careful with ENS, check out our full research report (it’s free for active Edge members).
Columbia Banking System (COLB)
Market Cap: $8.11 billion
Created through the merger of two Pacific Northwest banking institutions with deep regional roots, Columbia Banking System (NASDAQ: COLB) operates Umpqua Bank, providing commercial, consumer, and wealth management services across eight western states.
Why Are We Hesitant About COLB?
- Annual tangible book value per share declines of 1.2% for the past five years show its capital management struggled during this cycle
Columbia Banking System’s stock price of $27.75 implies a valuation ratio of 1x forward P/B. Read our free research report to see why you should think twice about including COLB in your portfolio.
One Small-Cap Stock to Watch:
Impinj (PI)
Market Cap: $4.83 billion
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Do We Watch PI?
- Market share has increased this cycle as its 20.2% annual revenue growth over the last five years was exceptional
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 49.4% annually, topping its revenue gains
- Free cash flow margin jumped by 15.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Impinj is trading at $162 per share, or 61x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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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