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.
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 are two small-cap stocks that could be the next big thing and one that could be down big.
One Small-Cap Stock to Sell:
Marcus & Millichap (MMI)
Market Cap: $1.18 billion
Founded in 1971, Marcus & Millichap (NYSE: MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Is MMI Risky?
- Lackluster 1.9% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Poor free cash flow margin of 6.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Marcus & Millichap is trading at $31.17 per share, or 69.5x forward P/E. If you’re considering MMI for your portfolio, see our FREE research report to learn more.
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 Are We Fans of FLYW?
- Billings have averaged 36.5% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Operating margin of 5% shows it’s one of the more profitable companies in the software space, and its profits increased over the last year as it scaled
- Free cash flow margin of 23% is higher than many in the industry, giving it breathing room and optionality
Flywire’s stock price of $18.84 implies a valuation ratio of 2.9x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Kirby (KEX)
Market Cap: $7.59 billion
Transporting goods along all U.S. coasts, Kirby (NYSE: KEX) provides inland and coastal marine transportation services.
Why Do We Like KEX?
- Impressive 11.1% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 24% to outpace its revenue gains
- Free cash flow margin expanded by 8.9 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $141.92 per share, Kirby trades at 20.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
