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 be the next 100 bagger and two that could be down big.
Two Small-Cap Stocks to Sell:
Great Lakes Dredge & Dock (GLDD)
Market Cap: $874.9 million
Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.
Why Are We Wary of GLDD?
- New orders were hard to come by as its average backlog growth of 4.2% over the past two years underwhelmed
- High input costs result in an inferior gross margin of 16.9% that must be offset through higher volumes
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Great Lakes Dredge & Dock’s stock price of $13.20 implies a valuation ratio of 13.9x forward P/E. To fully understand why you should be careful with GLDD, check out our full research report (it’s free for active Edge members).
Enact Holdings (ACT)
Market Cap: $5.72 billion
Playing a critical role in helping first-time homebuyers access the housing market, Enact Holdings (NASDAQ:ACT) provides private mortgage insurance that enables lenders to offer home loans with lower down payments while protecting against borrower defaults.
Why Does ACT Fall Short?
- Insurance offerings faced market headwinds this cycle, reflected in stagnant net premiums earned over the last five years
- Costs have risen faster than its revenue over the last two years, causing its combined ratio to worsen by 8.9 percentage points
- Earnings per share lagged its peers over the last two years as they only grew by 4.3% annually
At $39.64 per share, Enact Holdings trades at 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than ACT.
One Small-Cap Stock to Buy:
NMI Holdings (NMIH)
Market Cap: $3.14 billion
Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ:NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.
Why Are We Backing NMIH?
- Net premiums earned expanded by 9.2% annually over the last two years, outperforming the sector average and highlighting the appeal of its insurance products
- Underwriting operating profits increased over the last five years as the firm gained some leverage on its fixed costs and became more efficient
- Annual book value per share growth of 16.2% over the last five years was superb and indicates its capital strength increased during this cycle
NMI Holdings is trading at $40.79 per share, or 1.2x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.