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12 Small Caps to Sell

These small companies are all trading in 1- and 2-star range.

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A few weeks ago, we profiled what we called “elite” small caps that were trading in buying range. Our rationale for doing so: Because small-cap stocks have been also-rans to their large-cap brethren lately, buying small caps now may reward long-term investors. Moreover, smaller companies may be especially attractive to those who believe that the small-cap premium will win out again over time.

Today, we’re turning the idea on its head. Specifically, we've screened for stocks that land in the small-cap portion of the Morningstar Style Box but that are trading at 1- and 2-star levels. Although some of these companies may have good growth stories--several have even carved out economic moats--their stocks are too expensive today for our taste. A dozen names made the cut.

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Susan Dziubinski does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.