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.
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:
Reynolds (REYN)
Market Cap: $5.18 billion
Best known for its aluminum foil, Reynolds (NASDAQ: REYN) is a household products company whose products focus on food storage, cooking, and waste.
Why Do We Steer Clear of REYN?
- Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- 4.5 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
Reynolds is trading at $24.79 per share, or 14.6x forward P/E. If you’re considering REYN for your portfolio, see our FREE research report to learn more.
Seacoast Banking (SBCF)
Market Cap: $3.08 billion
Founded during the Florida land boom of 1926 and surviving the Great Depression, Seacoast Banking Corporation of Florida (NASDAQ: SBCF) is a financial holding company that provides commercial and retail banking, wealth management, and mortgage services throughout Florida.
Why Do We Pass on SBCF?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Sales over the last two years were less profitable as its earnings per share fell by 1.5% annually while its revenue was flat
- Estimated tangible book value per share decline of 1.8% for the next 12 months implies a challenging profitability environment
Seacoast Banking’s stock price of $31.88 implies a valuation ratio of 1.1x forward P/B. Check out our free in-depth research report to learn more about why SBCF doesn’t pass our bar.
One Small-Cap Stock to Watch:
SmartRent (SMRT)
Market Cap: $317.9 million
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Is SMRT on Our Radar?
- Offerings are pivotal for their customers' operations as its ARR has averaged 22.9% growth over the past two years
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 24.1% annually
- Historical investments are beginning to pay off as its returns on capital are growing
At $1.64 per share, SmartRent trades at 113x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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 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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