1 Small-Cap Stock with Solid Fundamentals and 2 We Question

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. That said, here is one small-cap stock that could amplify your portfolio’s returns and two best left ignored.

Two Small-Cap Stocks to Sell:

IAC (IAC)

Market Cap: $3.10 billion

Originally known as InterActiveCorp and built through Barry Diller's strategic acquisitions since the 1990s, IAC (NASDAQ:IAC) operates a portfolio of category-leading digital businesses including Dotdash Meredith, Angi, and Care.com, focusing on digital publishing, home services, and caregiving platforms.

Why Should You Dump IAC?

1. Sales tumbled by 15% annually over the last two years, showing market trends are working against its favor during this cycle
2. Earnings per share have dipped by 19.6% annually over the past five years, which is concerning because stock prices follow EPS over the long term
3. Negative returns on capital show that some of its growth strategies have backfired

IAC’s stock price of $40.12 implies a valuation ratio of 27.5x forward P/E. Dive into our free research report to see why there are better opportunities than IAC.

PennyMac Mortgage Investment Trust (PMT)

Market Cap: $1.15 billion

Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE:PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.

Why Should You Sell PMT?

1. Annual sales declines of 21.6% for the past five years show its products and services struggled to connect with the market during this cycle
2. Earnings per share have contracted by 9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Tangible book value per share tumbled by 5.2% annually over the last five years, showing banking sector trends are working against its favor during this cycle

PennyMac Mortgage Investment Trust is trading at $13.13 per share, or 0.9x forward P/B. Read our free research report to see why you should think twice about including PMT in your portfolio.

One Small-Cap Stock to Watch:

Fidelis Insurance (FIHL)

Market Cap: $1.98 billion

Founded in Bermuda in 2014 and designed to adapt nimbly to evolving market conditions, Fidelis Insurance (NYSE:FIHL) is a global specialty insurer and reinsurer that provides customized coverage across property, specialty, and bespoke risk solutions.

Why Does FIHL Stand Out?

1. Market penetration was impressive this cycle as its net premiums earned expanded by 17.1% annually over the last two years
2. Projected revenue growth of 10.1% for the next 12 months suggests its momentum from the last two years will persist
3. Projected book value per share growth of 21.8% for the next 12 months is above its two-year trend, pointing to accelerating profitability

At $19.21 per share, Fidelis Insurance trades at 0.8x forward P/B. Is now a good time to buy? See for yourself in our in-depth 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 6 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-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.