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 amplify your portfolio’s returns and two that could be down big.
Two Small-Cap Stocks to Sell:
Oceaneering (OII)
Market Cap: $3.60 billion
Deploying a fleet of 250 tethered underwater robots around the globe, Oceaneering International (NYSE: OII) provides remotely operated underwater vehicles and subsea equipment for offshore energy exploration.
Why Do We Think Twice About OII?
- Sales stagnated over the last ten years and signal the need for new growth strategies
- Gross margin of 17.1% reflects its high production costs and unfavorable asset base
- Low free cash flow margin of 5.3% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Oceaneering’s stock price of $36.69 implies a valuation ratio of 20x forward P/E. Dive into our free research report to see why there are better opportunities than OII.
New Fortress Energy (NFE)
Market Cap: $199.9 million
Building its first floating liquefaction unit off the coast of Mexico in 2024, New Fortress Energy (NASDAQ: NFE) supplies liquefied natural gas (LNG) to power plants and industrial customers in emerging markets.
Why Does NFE Fall Short?
- Cash-burning history makes us doubt the long-term viability of its business model
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $0.70 per share, New Fortress Energy trades at 80x forward EV-to-EBITDA. If you’re considering NFE for your portfolio, see our FREE research report to learn more.
One Small-Cap Stock to Watch:
Genpact (G)
Market Cap: $5.80 billion
Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE: G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions.
Why Could G Be a Winner?
- Performance over the past five years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- G is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
Genpact is trading at $34.21 per share, or 8.8x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
