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 are two small-cap stocks that could amplify your portfolio’s returns and one best left ignored.
One Small-Cap Stock to Sell:
Teradata (TDC)
Market Cap: $2.11 billion
Part of point-of-sale and ATM company NCR from 1991 to 2007, Teradata (NYSE:TDC) offers a software-as-service platform that helps organizations manage and analyze their data across multiple storages.
Why Do We Think TDC Will Underperform?
- Offerings couldn’t generate interest over the last year as its billings have averaged 6.1% declines
- Sales are projected to tank by 6.5% over the next 12 months as its demand continues evaporating
- High servicing costs result in a relatively inferior gross margin of 60.6% that must be offset through higher consumption volumes
At $22.34 per share, Teradata trades at 1.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than TDC.
Two Small-Cap Stocks to Watch:
ACV Auctions (ACVA)
Market Cap: $2.33 billion
Founded in 2014, ACV Auctions (NASDAQ:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Will ACVA Outperform?
- Marketplace Units have grown by 17% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- EBITDA profits increased over the last four years as the company gained some leverage on its fixed costs and became more efficient
- Earnings per share grew by 28.1% annually over the last three years, massively outpacing its peers
ACV Auctions is trading at $14.50 per share, or 27.7x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Primoris (PRIM)
Market Cap: $3.46 billion
Listed on the NASDAQ in 2008, Primoris (NYSE:PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.
Why Do We Like PRIM?
- Annual revenue growth of 20% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 23.2% annually
- Management team has demonstrated it can invest in profitable ventures through its 10.3% five-year return on capital
Primoris’s stock price of $66 implies a valuation ratio of 16.1x forward price-to-earnings. 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
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
