1 Small-Cap Stock to Keep an Eye On 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.

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 100 bagger and two that could be down big.

Two Small-Cap Stocks to Sell:

Adtalem (ATGE)

Market Cap: $3.57 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 Pass on ATGE?

1. Annual revenue growth of 13.9% over the last five years was below our standards for the consumer discretionary sector
2. Capital intensity will likely ramp up in the next year as its free cash flow margin is expected to contract by 2.8 percentage points
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Adtalem’s stock price of $103.52 implies a valuation ratio of 13x forward P/E. Check out our free in-depth research report to learn more about why ATGE doesn’t pass our bar.

Global Industrial (GIC)

Market Cap: $1.18 billion

Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.

Why Is GIC Risky?

1. 4.9% annual revenue growth over the last two years was slower than its industrials peers
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 1.4% annually while its revenue grew
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $30.57 per share, Global Industrial trades at 15.9x forward P/E. To fully understand why you should be careful with GIC, check out our full research report (it’s free).

One Small-Cap Stock to Watch:

Arlo Technologies (ARLO)

Market Cap: $1.35 billion

Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE:ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.

Why Are We Fans of ARLO?

1. Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 120% over the last two years outstripped its revenue performance
3. Free cash flow margin grew by 16.5 percentage points over the last five years, giving the company more chips to play with

Arlo Technologies is trading at $12.59 per share, or 17.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.