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 is one small-cap stock that could amplify your portfolio’s returns and two that could be down big.
Two Small-Cap Stocks to Sell:
Angi (ANGI)
Market Cap: $610.1 million
Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.
Why Does ANGI Fall Short?
- Intense competition is diverting traffic from its platform as its service requests fell by 20.6% annually
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
Angi’s stock price of $14.15 implies a valuation ratio of 4.1x forward EV/EBITDA. Read our free research report to see why you should think twice about including ANGI in your portfolio.
Lucky Strike (LUCK)
Market Cap: $1.27 billion
Born from the transformation of traditional bowling alleys into modern entertainment destinations, Lucky Strike (NYSE: LUCK) operates bowling alleys and other entertainment venues with upscale amenities, arcade games, and food and beverage services across North America.
Why Should You Dump LUCK?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $9.13 per share, Lucky Strike trades at 50.2x forward P/E. If you’re considering LUCK for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Buy:
The Bancorp (TBBK)
Market Cap: $3.04 billion
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ: TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
Why Is TBBK a Good Business?
- Annual net interest income growth of 16.2% over the past five years was outstanding, reflecting market share gains this cycle
- Differentiated product suite results in a Strong performance of its loan book results in a High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 4.6%
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
The Bancorp is trading at $69.28 per share, or 4.1x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
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 9 Market-Beating Stocks. 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 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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