1 Small-Cap Stock with Exciting Potential and 2 We Turn Down

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.

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 be the next big thing and two that may have trouble.

Two Small-Cap Stocks to Sell:

WeightWatchers (WW)

Market Cap: $298.5 million

Known by many for its old cable television commercials, WeightWatchers (NASDAQ:WW) is a wellness company offering a range of products and services promoting weight loss and healthy habits.

Why Do We Steer Clear of WW?

1. Number of members has disappointed over the past two years, indicating weak demand for its offerings
2. Waning returns on capital imply its previous profit engines are losing steam
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

WeightWatchers’s stock price of $30.47 implies a valuation ratio of 17.8x forward P/E. Read our free research report to see why you should think twice about including WW in your portfolio.

Hudson Technologies (HDSN)

Market Cap: $393 million

Founded in 1991, Hudson Technologies (NASDAQ:HDSN) specializes in refrigerant services and solutions, providing refrigerant sales, reclamation, and recycling.

Why Are We Wary of HDSN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 14.1% annually over the last two years
2. Earnings per share have contracted by 46.8% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $8.82 per share, Hudson Technologies trades at 10.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than HDSN.

One Small-Cap Stock to Buy:

Armstrong World (AWI)

Market Cap: $8.81 billion

Started as a two-man shop dating back to the 1860s, Armstrong (NYSE:AWI) provides ceiling and wall products to commercial and residential spaces.

Why Is AWI a Good Business?

1. Annual revenue growth of 11.1% over the last two years was superb and indicates its market share increased during this cycle
2. Disciplined cost controls and effective management resulted in a strong long-term operating margin of 24.7%, and its operating leverage amplified its profits over the last five years
3. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

Armstrong World is trading at $203.71 per share, or 26.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.

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-micro-cap company Tecnoglass (+1,754% 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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