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.
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 are two small-cap stocks that could amplify your portfolio’s returns and one best left ignored.
One Small-Cap Stock to Sell:
Brink's (BCO)
Market Cap: $4.44 billion
Known for its iconic armored trucks that have been a fixture in American cities since 1859, Brink's (NYSE:BCO) provides secure transportation and management of cash and valuables for banks, retailers, and other businesses worldwide.
Why Does BCO Worry Us?
- Sales trends were unexciting over the last two years as its 3.5% annual growth was below the typical business services company
- 1.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Underwhelming 14% return on capital reflects management’s difficulties in finding profitable growth opportunities
Brink's is trading at $106.79 per share, or 13.3x forward P/E. Check out our free in-depth research report to learn more about why BCO doesn’t pass our bar.
Two Small-Cap Stocks to Watch:
Commvault Systems (CVLT)
Market Cap: $8.25 billion
Originally formed in 1988 as part of Bell Labs, Commvault (NASDAQ: CVLT) provides enterprise software used for data backup and recovery, cloud and infrastructure management, retention, and compliance.
Why Do We Like CVLT?
- Average billings growth of 26.5% over the last year enhances its liquidity and shows there is steady demand for its products
- Superior software functionality and low servicing costs result in a premier gross margin of 82%
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 7.6%
Commvault Systems’s stock price of $189.52 implies a valuation ratio of 7.1x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Alignment Healthcare (ALHC)
Market Cap: $2.89 billion
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ:ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
Why Will ALHC Outperform?
- Average customer growth of 40.2% over the past two years demonstrates success in acquiring new clients that could increase their spending in the future
- Earnings per share have massively outperformed its peers over the last four years, increasing by 45.5% annually
- Free cash flow profile has moved into break even territory, showing the company is at an important crossroads
At $14.55 per share, Alignment Healthcare trades at 39.9x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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