1 Small-Cap Stock to Keep an Eye On and 2 We Brush Off

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 be the next 100 bagger and two that may have trouble.

Two Small-Cap Stocks to Sell:

Adtalem (ATGE)

Market Cap: $3.48 billion

Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.

Why Do We Think Twice About ATGE?

1. Annual revenue growth of 11.8% over the last two years was below our standards for the consumer discretionary sector
2. Estimated sales growth of 6.5% for the next 12 months implies demand will slow from its two-year trend
3. ROIC of 10.2% reflects management’s challenges in identifying attractive investment opportunities

Adtalem is trading at $95.82 per share, or 8.9x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why ATGE doesn’t pass our bar.

SolarEdge (SEDG)

Market Cap: $2.08 billion

Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.

Why Do We Pass on SEDG?

1. Performance surrounding its megawatts shipped has lagged its peers
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. Negative earnings profile makes it challenging to secure favorable financing terms from lenders

SolarEdge’s stock price of $34.98 implies a valuation ratio of 1.5x forward price-to-sales. If you’re considering SEDG for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

KBR (KBR)

Market Cap: $5.18 billion

Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.

Why Are We Fans of KBR?

1. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
2. Share repurchases over the last five years enabled its annual earnings per share growth of 17.9% to outpace its revenue gains
3. Returns on capital are climbing as management makes more lucrative bets

At $42.05 per share, KBR trades at 10.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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-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

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.