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:

EverQuote (EVER)

Market Cap: $773.8 million

Aiming to simplify a once complicated process, EverQuote (NASDAQ:EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers

Why Is EVER Not Exciting?

1. 6.1% annual revenue growth over the last three years was slower than its consumer internet peers

2. High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum

EverQuote’s stock price of $21.18 implies a valuation ratio of 12.5x forward EV-to-EBITDA. To fully understand why you should be careful with EVER, check out our full research report (it’s free) .

Topgolf Callaway (MODG)

Market Cap: $1.16 billion

Formed between the merger of Callaway and Topgolf, Topgolf Callaway (NYSE:MODG) sells golf equipment and operates technology-driven golf entertainment venues.

Why Should You Sell MODG?

1. Constant currency revenue growth has disappointed over the past two years and shows demand was soft

2. Low free cash flow margin of -0.4% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $6.01 per share, Topgolf Callaway trades at 368.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than MODG .

One Small-Cap Stock to Buy:

Remitly (RELY)

Market Cap: $4.08 billion

With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ:RELY) is an online platform that enables consumers to safely and quickly send money globally.

Why Are We Backing RELY?

1. Active Customers have grown by 39.9% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features

2. Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 88.9% outpaced its revenue gains

3. Free cash flow margin increased by 19.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders