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.
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. Keeping that in mind, here are two small-cap stocks that could amplify your portfolio’s returns and one that could be down big.
One Small-Cap Stock to Sell:
Camping World (CWH)
Market Cap: $411.6 million
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE: CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Why Do We Steer Clear of CWH?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- 6.6 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $6.42 per share, Camping World trades at 11.7x forward P/E. Dive into our free research report to see why there are better opportunities than CWH.
Two Small-Cap Stocks to Watch:
Upwork (UPWK)
Market Cap: $1.43 billion
Formed through the 2013 merger of Elance and oDesk, Upwork (NASDAQ: UPWK) is an online platform where businesses and independent professionals connect to get work done.
Why Does UPWK Stand Out?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 10.1% annual growth in its average revenue per customer
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 197% outpaced its revenue gains
- UPWK is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Upwork’s stock price of $11.06 implies a valuation ratio of 5x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Warby Parker (WRBY)
Market Cap: $2.48 billion
Founded in 2010, Warby Parker (NYSE: WRBY) designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.
Why Is WRBY a Good Business?
- Aggressive expansion of new stores reflects an offensive push to quickly grow and sell in markets where it has few or no locations
- Notable projected revenue growth of 12.7% for the next 12 months hints at market share gains
- Earnings per share have massively outperformed its peers over the last three years, increasing by 134% annually
Warby Parker is trading at $20.35 per share, or 41.4x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
