1 Small-Cap Stock with Impressive Fundamentals and 2 That Underwhelm

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.

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. Keeping that in mind, here is one small-cap stock that could be the next 100 bagger and two best left ignored.

Two Small-Cap Stocks to Sell:

Skyworks Solutions (SWKS)

Market Cap: $8.70 billion

Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.

Why Do We Pass on SWKS?

1. Annual sales declines of 7.5% for the past two years show its products and services struggled to connect with the market during this cycle
2. Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
3. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 19.3 percentage points

Skyworks Solutions is trading at $58.52 per share, or 13.3x forward P/E. To fully understand why you should be careful with SWKS, check out our full research report (it’s free).

Resideo (REZI)

Market Cap: $5.63 billion

Resideo Technologies, Inc. (NYSE: REZI) is a manufacturer and distributor of technology-driven products and solutions for home comfort, energy management, water management, and safety and security.

Why Are We Cautious About REZI?

1. Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its two-year trend
2. Free cash flow margin shrank by 22.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $37.61 per share, Resideo trades at 13.7x forward P/E. Dive into our free research report to see why there are better opportunities than REZI.

One Small-Cap Stock to Buy:

WisdomTree (WT)

Market Cap: $1.83 billion

Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE:WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.

Why Is WT a Top Pick?

1. Market share has increased this cycle as its 17.4% annual revenue growth over the last two years was exceptional
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 57.1% over the last two years outstripped its revenue performance
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

WisdomTree’s stock price of $13.28 implies a valuation ratio of 14.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

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.