1 Small-Cap Stock to Research Further and 2 We Turn Down

Barchart·05/11/2026 02:30:20

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 be the next big thing and two that may have trouble.

Two Small-Cap Stocks to Sell:

Universal Display (OLED)

Market Cap: $4.29 billion

Serving major consumer electronics manufacturers, Universal Display (NASDAQ:OLED) is a provider of organic light emitting diode (OLED) technologies used in display and lighting applications.

Why Does OLED Worry Us?

1. Sales trends were unexciting over the last two years as its 1.2% annual growth was below the typical semiconductor company
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 6.1%

Universal Display is trading at $91.71 per share, or 20.1x forward P/E. If you’re considering OLED for your portfolio, see our FREE research report to learn more.

ProPetro (PUMP)

Market Cap: $1.92 billion

Operating exclusively in the Permian Basin—one of America's most prolific oil-producing regions—ProPetro (NYSE:PUMP) provides hydraulic fracturing services that pump high-pressure fluid and sand into oil wells to release trapped hydrocarbons.

Why Do We Avoid PUMP?

1. Smaller revenue base of $1.18 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
2. Costly operations and weak unit economics result in an inferior gross margin of 27.4% that must be offset through higher production volumes
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.4% for the last five years

At $15.58 per share, ProPetro trades at 491x forward P/E. Dive into our free research report to see why there are better opportunities than PUMP.

One Small-Cap Stock to Watch:

Brinker International (EAT)

Market Cap: $5.95 billion

Founded by Norman Brinker in Dallas, Brinker International (NYSE:EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.

Why Are We Fans of EAT?

1. Average same-store sales growth of 15.5% over the past two years indicates its restaurants are resonating with diners
2. Economies of scale give it more fixed cost leverage than its smaller competitors
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities

Brinker International’s stock price of $138.76 implies a valuation ratio of 12.4x 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

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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

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