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. Keeping that in mind, here are two small-cap stocks that could be the next big thing and one that may have trouble.
One Small-Cap Stock to Sell:
Moelis (MC)
Market Cap: $5.12 billion
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Why Does MC Fall Short?
- Annual revenue growth of 4.9% over the last five years was below our standards for the financials sector
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 9.1% annually while its revenue grew
- Flat tangible book value per share over the last five years suggests it must find different ways to enhance shareholder value during this cycle
Moelis is trading at $69.15 per share, or 19.1x forward P/E. Check out our free in-depth research report to learn more about why MC doesn’t pass our bar.
Two Small-Cap Stocks to Watch:
Flywire (FLYW)
Market Cap: $2.28 billion
Initially created to solve the challenges of international student tuition payments, Flywire (NASDAQ: FLYW) provides specialized payment processing and software solutions that help educational institutions, healthcare systems, travel companies, and businesses manage complex payments.
Why Do We Like FLYW?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 33.9% over the last year
- Estimated revenue growth of 17.3% for the next 12 months implies its momentum over the last two years will continue
- Free cash flow generation is better than most peers and allows it to explore new investment opportunities
Flywire’s stock price of $18.70 implies a valuation ratio of 2.8x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Sprouts (SFM)
Market Cap: $7.38 billion
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.
Why Are We Fans of SFM?
- Offensive push to build new stores and attack its untapped market opportunities is backed by its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 5.8% growth over the past two years
- Expected revenue growth of 10.8% for the next year suggests its market share will rise
At $79.31 per share, Sprouts trades at 13.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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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.
