1 Small-Cap Stock with Competitive Advantages and 2 We Brush Off

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.

The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two that may have trouble.

Two Small-Cap Stocks to Sell:

Xponential Fitness (XPOF)

Market Cap: $212.4 million

Owner of Club Pilates, Stretch Lab, BFT and Pure Barre, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.

Why Do We Avoid XPOF?

1. Annual revenue growth of 19.5% over the last five years was below our standards for the consumer discretionary sector
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. High net-debt-to-EBITDA ratio of 5× increases the risk of forced asset sales or dilutive financing if operational performance weakens

At $5.12 per share, Xponential Fitness trades at 11.2x forward P/E. If you’re considering XPOF for your portfolio, see our FREE research report to learn more.

Teleflex (TFX)

Market Cap: $5.72 billion

With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE:TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.

Why Do We Pass on TFX?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Teleflex’s stock price of $134.91 implies a valuation ratio of 15x forward P/E. Check out our free in-depth research report to learn more about why TFX doesn’t pass our bar.

One Small-Cap Stock to Watch:

Celsius (CELH)

Market Cap: $7.03 billion

With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.

Why Are We Fans of CELH?

1. Annual revenue growth of 47.4% over the past three years was outstanding, reflecting market share gains
2. Earnings per share have massively outperformed its peers over the last three years, increasing by 91.4% annually
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety

Celsius is trading at $27.45 per share, or 15.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

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 meet near-term momentum — both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.