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 are two small-cap stocks that could amplify your portfolio’s returns and one that could be down big.
One Small-Cap Stock to Sell:
Winnebago (WGO)
Market Cap: $1.07 billion
Created to provide high-quality, affordable RVs to the post-war American family, Winnebago (NYSE: WGO) is a manufacturer of recreational vehicles, providing a range of motorhomes, travel trailers, and fifth-wheel products for outdoor and adventure lifestyles.
Why Do We Steer Clear of WGO?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.7% annually over the last two years
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 10.1% annually while its revenue grew
- Eroding returns on capital suggest its historical profit centers are aging
At $38.03 per share, Winnebago trades at 15.3x forward P/E. Read our free research report to see why you should think twice about including WGO in your portfolio.
Two Small-Cap Stocks to Watch:
Zeta Global (ZETA)
Market Cap: $4.62 billion
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE: ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Will ZETA Beat the Market?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 31.5% over the last year
- Notable projected revenue growth of 34.7% for the next 12 months hints at market share gains
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
Zeta Global is trading at $18.95 per share, or 2.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
LegalZoom (LZ)
Market Cap: $1.17 billion
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ: LZ) offers online legal services and documentation assistance for individuals and businesses.
Why Does LZ Stand Out?
- Has the opportunity to boost monetization through new features and premium offerings as its subscription units have grown by 12.5% annually over the last two years
- Strong engagement trends coupled with 52.9% annual growth in its average revenue per user demonstrate its platform’s stickiness with die-hard customers
- Free cash flow margin increased by 11.2 percentage points over the last few years, giving the company more capital to invest or return to shareholders
LegalZoom’s stock price of $6.79 implies a valuation ratio of 5.2x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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.
