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.

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 that could be down big.

Two Small-Cap Stocks to Sell:

Mission Produce (AVO)

Market Cap: $887 million

Founded in 1983 in California, Mission Produce (NASDAQ: AVO) grows, packages, and distributes avocados.

Why Do We Steer Clear of AVO?

1. Smaller revenue base of $1.39 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Estimated sales decline of 15% for the next 12 months implies a challenging demand environment
3. Gross margin of 10.9% is an output of its commoditized products

At $12.56 per share, Mission Produce trades at 16x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than AVO.

Walgreens (WBA)

Market Cap: $9.78 billion

Primarily offering prescription medicine, health, and beauty products, Walgreens Boots Alliance (NASDAQ: WBA) is a pharmacy chain formed through the 2014 major merger of American company Walgreens and European company Alliance Boots.

Why Do We Avoid WBA?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.9% for the last six years
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18% that must be offset through higher volumes
3. High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Walgreens’s stock price of $11.30 implies a valuation ratio of 7.4x forward P/E. Read our free research report to see why you should think twice about including WBA in your portfolio.

One Small-Cap Stock to Buy:

Vital Farms (VITL)

Market Cap: $1.61 billion

With an emphasis on ethically produced products, Vital Farms (NASDAQ: VITL) specializes in pasture-raised eggs and butter.

Why Will VITL Outperform?

1. Stellar 17.8% growth in unit sales over the past two years demonstrates the high demand for its products
2. Notable projected revenue growth of 26.6% for the next 12 months hints at market share gains
3. Earnings per share grew by 161% annually over the last three years, massively outpacing its peers

Vital Farms is trading at $35.80 per share, or 26.4x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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-small-cap company Comfort Systems (+782% 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