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. 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:
Great Lakes Dredge & Dock (GLDD)
Market Cap: $813.2 million
Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ: GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.
Why Is GLDD Not Exciting?
- 2.9% annual revenue growth over the last five years was slower than its industrials peers
- Projected sales decline of 1.3% for the next 12 months points to a tough demand environment ahead
- Cash burn makes us question whether it can achieve sustainable long-term growth
Great Lakes Dredge & Dock’s stock price of $12.00 implies a valuation ratio of 15x forward P/E. To fully understand why you should be careful with GLDD, check out our full research report (it’s free for active Edge members).
Methode Electronics (MEI)
Market Cap: $287 million
Founded in 1946, Methode Electronics (NYSE: MEI) is a global supplier of custom-engineered solutions for Original Equipment Manufacturers (OEMs).
Why Should You Sell MEI?
- Annual sales declines of 6.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Free cash flow margin dropped by 11.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Methode Electronics is trading at $8.15 per share, or 204x forward P/E. Check out our free in-depth research report to learn more about why MEI doesn’t pass our bar.
One Small-Cap Stock to Buy:
WisdomTree (WT)
Market Cap: $1.95 billion
Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.
Why Do We Love WT?
- Market share has increased this cycle as its 18.6% annual revenue growth over the last two years was exceptional
- Additional sales over the last two years increased its profitability as the 62.9% annual growth in its earnings per share outpaced its revenue
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $13.70 per share, WisdomTree trades at 17.1x forward P/E. Is now the time to initiate a position? Find out in our full 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 Growth Stocks for this month. 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-micro-cap company Kadant (+351% 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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