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 best left ignored.

One Small-Cap Stock to Sell:

Wiley (WLY)

Market Cap: $1.95 billion

With roots dating back to 1807 when Charles Wiley opened a small printing shop in Manhattan, John Wiley & Sons (NYSE: WLY) is a global academic publisher that provides scientific journals, books, digital courseware, and knowledge solutions for researchers, students, and professionals.

Why Should You Sell WLY?

1. Annual sales declines of 1.9% for the past five years show its products and services struggled to connect with the market during this cycle
2. Earnings per share have dipped by 1.3% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 7.3 percentage points

Wiley is trading at $36.59 per share, or 5.5x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than WLY.

Two Small-Cap Stocks to Watch:

Dycom (DY)

Market Cap: $8.42 billion

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.

Why Are We Fans of DY?

1. Impressive 11.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Operating margin expanded by 5.1 percentage points over the last five years as it scaled and became more efficient
3. Share buybacks catapulted its annual earnings per share growth to 18%, which outperformed its revenue gains over the last two years

Dycom’s stock price of $290.90 implies a valuation ratio of 27.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

NMI Holdings (NMIH)

Market Cap: $2.77 billion

Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ: NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.

Why Is NMIH a Good Business?

1. Steady 9.8% annualized growth in net premiums earned over the last two years shows its insurance offerings are gaining traction
2. Combined ratio improved by 14.4 percentage points over the last four years as it scaled
3. Annual book value per share growth of 16% over the past five years was outstanding, reflecting strong capital accumulation this cycle

At $35.99 per share, NMI Holdings trades at 1.1x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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