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 amplify your portfolio’s returns and two that may have trouble.
Two Small-Cap Stocks to Sell:
Ruger (RGR)
Market Cap: $560.1 million
Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.
Why Should You Sell RGR?
- Annual revenue growth of 1.4% over the last five years was below our standards for the consumer discretionary sector
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 6.9% for the last two years
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Ruger’s stock price of $35.25 implies a valuation ratio of 22.7x forward P/E. Check out our free in-depth research report to learn more about why RGR doesn’t pass our bar.
Community Bank (CBU)
Market Cap: $3.20 billion
Tracing its roots back to 1866 in upstate New York, Community Financial System (NYSE: CBU) is a financial holding company that provides banking, employee benefits, wealth management, and insurance services to retail, commercial, and municipal customers.
Why Does CBU Fall Short?
- Muted 6% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Performance over the past five years shows its incremental sales were less profitable, as its 4.2% annual earnings per share growth trailed its revenue gains
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 3.3% annually over the last five years
At $60.78 per share, Community Bank trades at 1.6x forward P/B. Read our free research report to see why you should think twice about including CBU in your portfolio.
One Small-Cap Stock to Watch:
Upwork (UPWK)
Market Cap: $2.73 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 Do We Like UPWK?
- Monetization efforts are paying off as its average revenue per customer has grown by 9.4% annually over the last two years
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 123% outpaced its revenue gains
- Free cash flow margin increased by 29.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Upwork is trading at $20.88 per share, or 11x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.
