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.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. 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:
DaVita (DVA)
Market Cap: $8.35 billion
With over 2,600 dialysis centers across the United States and a presence in 13 countries, DaVita (NYSE: DVA) operates a network of dialysis centers providing treatment and care for patients with chronic kidney disease and end-stage kidney disease.
Why Do We Think Twice About DVA?
- Sizable revenue base leads to growth challenges as its 2.9% annual revenue increases over the last five years fell short of other healthcare companies
- Flat treatments over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its two-year trend
At $118.98 per share, DaVita trades at 9.7x forward P/E. If you’re considering DVA for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Watch:
Limbach (LMB)
Market Cap: $839.5 million
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Why Could LMB Be a Winner?
- Operating margin expansion of 6 percentage points over the last five years shows the company optimized its expenses
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 42.5% over the last two years outstripped its revenue performance
- Free cash flow margin grew by 8 percentage points over the last five years, giving the company more chips to play with
Limbach’s stock price of $72.21 implies a valuation ratio of 16.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Nicolet Bankshares (NIC)
Market Cap: $1.91 billion
Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE: NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.
Why Are We Positive On NIC?
- Impressive 18.5% annual net interest income growth over the last five years indicates it’s winning market share this cycle
- Market share is on track to rise over the next 12 months as its 33.8% projected net interest income growth implies demand will accelerate from its five-year trend
- Net interest margin grew by 42.7 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more chips to play with
Nicolet Bankshares is trading at $128.96 per share, or 1.5x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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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