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:
Ollie's (OLLI)
Market Cap: $4.74 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 Does OLLI Worry Us?
- Modest revenue base of $2.73 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency
- Underwhelming 9.2% return on capital reflects management’s difficulties in finding profitable growth opportunities
Ollie’s stock price of $78.41 implies a valuation ratio of 16.9x forward P/E. Read our free research report to see why you should think twice about including OLLI in your portfolio.
Bloomin' Brands (BLMN)
Market Cap: $1.01 billion
Owner of the iconic Australian-themed Outback Steakhouse, Bloomin’ Brands (NASDAQ: BLMN) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Why Should You Sell BLMN?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1%
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $11.89 per share, Bloomin' Brands trades at 10.8x forward P/E. If you’re considering BLMN for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
Powell (POWL)
Market Cap: $7.59 billion
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE: POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Should You Buy POWL?
- Impressive 20.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 22.2% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 17.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Powell is trading at $209.88 per share, or 34.5x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
