1 Small-Cap Stock Worth Your Attention and 2 We Avoid

Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.

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. 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:

Cogent (CCOI)

Market Cap: $1.10 billion

Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ:CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.

Why Does CCOI Fall Short?

1. Performance surrounding its total connections has lagged its peers
2. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Cogent is trading at $23.27 per share, or 3.6x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than CCOI.

Crane NXT (CXT)

Market Cap: $2.97 billion

Born from a corporate transformation completed in 2023, Crane NXT (NYSE:CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.

Why Do We Avoid CXT?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 6.3% annually
3. 11.5 percentage point decline in its free cash flow margin over the last four years reflects the company’s increased investments to defend its market position

Crane NXT’s stock price of $51.77 implies a valuation ratio of 12.3x forward P/E. Read our free research report to see why you should think twice about including CXT in your portfolio.

One Small-Cap Stock to Buy:

Powell (POWL)

Market Cap: $4.08 billion

Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.

Why Will POWL Beat the Market?

1. Annual revenue growth of 25.7% over the past two years was outstanding, reflecting market share gains this cycle
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 86.5% outpaced its revenue gains
3. Free cash flow margin jumped by 21.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $337.25 per share, Powell trades at 23.8x 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

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 Strong Momentum 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 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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