Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

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 is one small-cap stock that could be the next big thing and two that could be down big.

Two Small-Cap Stocks to Sell:

Paycor (PYCR)

Market Cap: $4.09 billion

Founded in 1990 in Cincinnati, Ohio, Paycor (NASDAQ: PYCR) provides software for small businesses to manage their payroll and HR needs in one place.

Why Are We Cautious About PYCR?

1. Estimated sales growth of 9.6% for the next 12 months implies demand will slow from its three-year trend
2. High servicing costs result in a relatively inferior gross margin of 66% that must be offset through increased usage
3. Historical operating margin losses point to an inefficient cost structure

At $22.49 per share, Paycor trades at 5.3x forward price-to-sales. To fully understand why you should be careful with PYCR, check out our full research report (it’s free).

Oshkosh (OSK)

Market Cap: $6.39 billion

Oshkosh (NYSE: OSK) manufactures specialty vehicles for the defense, fire, emergency, and commercial industry, operating various brand subsidiaries within each industry.

Why Does OSK Fall Short?

1. Average backlog growth of 4% over the past two years was mediocre and suggests fewer customers signed long-term contracts
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
3. Free cash flow margin dropped by 9.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Oshkosh’s stock price of $98.40 implies a valuation ratio of 9.1x forward P/E. Check out our free in-depth research report to learn more about why OSK doesn’t pass our bar.

One Small-Cap Stock to Watch:

Grand Canyon Education (LOPE)

Market Cap: $5.53 billion

Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.

Why Are We Positive On LOPE?

1. Excellent operating margin of 26.5% highlights the efficiency of its business model
2. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
3. Returns on capital are climbing as management makes more lucrative bets

Grand Canyon Education is trading at $197.86 per share, or 22.2x 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

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.