Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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 that may have trouble.
Two Small-Cap Stocks to Sell:
WillScot Mobile Mini (WSC)
Market Cap: $3.38 billion
Originally focusing on mobile offices for construction sites, WillScot (NASDAQ: WSC) provides ready-to-use temporary spaces, largely for longer-term lease.
Why Do We Steer Clear of WSC?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.8% annually over the last two years
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 10.5 percentage points
- Issuance of new shares over the last five years caused its earnings per share to fall by 1.6% annually while its revenue grew
WillScot Mobile Mini’s stock price of $18.68 implies a valuation ratio of 17.8x forward P/E. To fully understand why you should be careful with WSC, check out our full research report (it’s free).
Casella Waste Systems (CWST)
Market Cap: $5.51 billion
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.
Why Are We Wary of CWST?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 5.3 percentage points
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Casella Waste Systems is trading at $86.79 per share, or 66.7x forward P/E. If you’re considering CWST for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
Donnelley Financial Solutions (DFIN)
Market Cap: $1.26 billion
Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE: DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements.
Why Does DFIN Stand Out?
- Earnings per share have outperformed the peer group average over the last five years, increasing by 15.7% annually
- Industry-leading 25.8% return on equity demonstrates management’s skill in finding high-return investments
At $49.33 per share, Donnelley Financial Solutions trades at 10.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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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.
