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 big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
ICU Medical (ICUI)
Market Cap: $3.10 billion
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Are We Wary of ICUI?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Forecasted revenue decline of 1.8% for the upcoming 12 months implies demand will fall off a cliff
- Free cash flow margin shrank by 11.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $124.07 per share, ICU Medical trades at 15.8x forward P/E. Check out our free in-depth research report to learn more about why ICUI doesn’t pass our bar.
LendingTree (TREE)
Market Cap: $578.1 million
Using the same comparison model that revolutionized travel booking, LendingTree (NASDAQ: TREE) operates an online platform that connects consumers with financial service providers across mortgages, personal loans, credit cards, insurance, and other financial products.
Why Are We Cautious About TREE?
- Lackluster 4.3% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
LendingTree’s stock price of $41.73 implies a valuation ratio of 5.9x forward EV/EBITDA. To fully understand why you should be careful with TREE, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
Astrana Health (ASTH)
Market Cap: $1.20 billion
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ: ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Why Are We Positive On ASTH?
- Annual revenue growth of 51.5% over the last two years was superb and indicates its market share increased during this cycle
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Earnings per share have massively outperformed its peers over the last five years, increasing by 15.9% annually
Astrana Health is trading at $24.18 per share, or 9x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
