1 Small-Cap Stock to Research Further and 2 to Brush Off

Max Juang

Fri, May 30, 2025, 12:32 AM 3 min read

Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings. However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.

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.

Market Cap: $150.5 million

Short for Real Estate Maximums, RE/MAX (NYSE:RMAX) operates a real estate franchise network spanning over 100 countries and territories.

Why Should You Dump RMAX?

1. Performance surrounding its agents has lagged its peers

2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 8.9% annually

3. Breakeven ROIC reflects management’s challenges in identifying attractive investment opportunities

RE/MAX is trading at $7.55 per share, or 5.8x forward P/E. To fully understand why you should be careful with RMAX, check out our full research report (it’s free).

Market Cap: $1.40 billion

Driven by the vision of an “Autonomous Pharmacy” with zero medication errors, Omnicell (NASDAQ:OMCL) provides medication management automation and adherence tools that help healthcare systems and pharmacies reduce errors and improve efficiency.

Why Do We Steer Clear of OMCL?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.4% annually over the last two years

2. Subscale operations are evident in its revenue base of $1.14 billion, meaning it has fewer distribution channels than its larger rivals

3. Incremental sales over the last five years were much less profitable as its earnings per share fell by 7.6% annually while its revenue grew

Omnicell’s stock price of $29.83 implies a valuation ratio of 16.2x forward P/E. If you’re considering OMCL for your portfolio, see our FREE research report to learn more.

Market Cap: $1.42 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 Do We Like ARLO?

1. Operating margin profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient

2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 193% over the last two years outstripped its revenue performance

3. Free cash flow margin expanded by 19.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends