1 Small-Cap Stock to Consider Right Now and 2 We Ignore

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. 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:

Wendy's (WEN)

Market Cap: $1.7 billion

Founded by Dave Thomas in 1969, Wendy’s (NASDAQ:WEN) is a renowned fast-food chain known for its fresh, never-frozen beef burgers, flavorful menu options, and commitment to quality.

Why Is WEN Not Exciting?

1. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
2. Forecasted revenue decline of 2.3% for the upcoming 12 months implies demand will fall off a cliff
3. 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Wendy’s stock price of $8.94 implies a valuation ratio of 10.4x forward P/E. To fully understand why you should be careful with WEN, check out our full research report (it’s free for active Edge members).

HA Sustainable Infrastructure Capital (HASI)

Market Cap: $3.70 billion

With a proprietary "CarbonCount" metric that quantifies the environmental impact of each dollar invested, HA Sustainable Infrastructure Capital (NYSE:HASI) is an investment firm that finances and develops climate-positive infrastructure projects across renewable energy, energy efficiency, and ecological restoration.

Why Does HASI Worry Us?

1. Annual earnings per share growth of 8.4% underperformed its revenue over the last five years, showing its incremental sales were less profitable
2. ROE of 7.8% reflects management’s challenges in identifying attractive investment opportunities
3. High net-debt-to-EBITDA ratio of 68× could force the company to raise capital at unfavorable terms if market conditions deteriorate

At $29.85 per share, HA Sustainable Infrastructure Capital trades at 10.6x forward P/E. If you’re considering HASI for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

Gorman-Rupp (GRC)

Market Cap: $1.19 billion

Powering fluid dynamics since 1934, Gorman-Rupp (NYSE:GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.

Why Could GRC Be a Winner?

1. Annual revenue growth of 12.7% over the last five years was superb and indicates its market share increased during this cycle
2. Operating margin expanded by 4.2 percentage points over the last five years as it scaled and became more efficient
3. Earnings per share grew by 37.6% annually over the last two years and trumped its peers

Gorman-Rupp is trading at $45.41 per share, or 20x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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 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-micro-cap company Kadant (+351% 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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