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:

The ONE Group (STKS)

Market Cap: $80.49 million

Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ: STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill.

Why Does STKS Give Us Pause?

1. Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
2. Earnings per share have contracted by 19.2% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3. High net-debt-to-EBITDA ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens

At $2.60 per share, The ONE Group trades at 5.7x forward P/E. If you’re considering STKS for your portfolio, see our FREE research report to learn more.

Titan International (TWI)

Market Cap: $495.2 million

Acquiring Goodyear’s farm tire business in 2005, Titan (NSYE:TWI) is a manufacturer and supplier of wheels, tires, and undercarriages used in off-highway vehicles such as construction vehicles.

Why Is TWI Risky?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.2% annually over the last two years
2. Diminishing returns on capital suggest its earlier profit pools are drying up
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Titan International’s stock price of $7.70 implies a valuation ratio of 21.8x forward P/E. Read our free research report to see why you should think twice about including TWI in your portfolio.

One Small-Cap Stock to Buy:

Paymentus (PAY)

Market Cap: $3.89 billion

Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE: PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.

Why Are We Bullish on PAY?

1. Annual revenue growth of 36.9% over the past two years was outstanding, reflecting market share gains this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 134% over the last two years outstripped its revenue performance

Paymentus is trading at $31.06 per share, or 50.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

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 9 Market-Beating Stocks. 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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