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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, here is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
Amneal (AMRX)
Market Cap: $5.21 billion
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Is AMRX Not Exciting?
- Estimated sales growth of 2.2% for the next 12 months implies demand will slow from its two-year trend
- Free cash flow margin has shown no improvement over the last five years
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Amneal is trading at $16.20 per share, or 17.4x forward P/E. If you’re considering AMRX for your portfolio, see our FREE research report to learn more.
Insight Enterprises (NSIT)
Market Cap: $3.34 billion
With over 35 years of IT expertise and partnerships with more than 8,000 technology providers, Insight Enterprises (NASDAQ: NSIT) provides end-to-end digital transformation solutions that help businesses modernize their IT infrastructure and maximize the value of technology.
Why Should You Sell NSIT?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Projected sales growth of 1.3% for the next 12 months suggests sluggish demand
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.1% annually
At $109.22 per share, Insight Enterprises trades at 9.5x forward P/E. To fully understand why you should be careful with NSIT, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
The Trade Desk (TTD)
Market Cap: $8.89 billion
Built as an alternative to "walled garden" advertising ecosystems, The Trade Desk (NASDAQ: TTD) provides a cloud-based platform that helps advertisers and agencies plan, manage, and optimize digital advertising campaigns across multiple channels and devices.
Why Do We Like TTD?
- Annual revenue growth of 20.2% over the past two years was outstanding, reflecting market share gains
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Highly efficient business model is illustrated by its impressive 20.3% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
The Trade Desk’s stock price of $18.97 implies a valuation ratio of 2.8x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
