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.

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 be the next big thing and two best left ignored.

Two Small-Cap Stocks to Sell:

Caleres (CAL)

Market Cap: $468.8 million

The owner of Dr. Scholl's, Caleres (NYSE: CAL) is a footwear company offering a range of styles.

Why Do We Avoid CAL?

1. Annual sales declines of 3.8% for the past two years show its products and services struggled to connect with the market
2. Sales are projected to be flat over the next 12 months and imply weak demand
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Caleres is trading at $13.87 per share, or 4.5x forward P/E. Check out our free in-depth research report to learn more about why CAL doesn’t pass our bar.

Graphic Packaging Holding (GPK)

Market Cap: $6.51 billion

Founded in 1991, Graphic Packaging (NYSE: GPK) is a provider of paper-based packaging solutions for a wide range of products.

Why Should You Dump GPK?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Earnings per share have dipped by 10.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Free cash flow margin dropped by 8.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $21.89 per share, Graphic Packaging Holding trades at 10.1x forward P/E. Dive into our free research report to see why there are better opportunities than GPK.

One Small-Cap Stock to Watch:

Ollie's (OLLI)

Market Cap: $8.60 billion

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ: OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Why Do We Watch OLLI?

1. Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
2. Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.1% growth over the past two years
3. Demand for the next 12 months is expected to accelerate above its six-year trend as Wall Street forecasts robust revenue growth of 14.1%

Ollie’s stock price of $141.29 implies a valuation ratio of 36.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.

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