1 Small-Cap Stock with Competitive Advantages and 2 We Avoid

September 16, 2025 at 00:34 AM EDT

BIGC Cover Image

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. That said, here is one small-cap stock that could be the next 100 bagger and two that may have trouble.

Two Small-Cap Stocks to Sell:

BigCommerce (BIGC)

Market Cap: $380.3 million

As a founding member of the MACH Alliance advocating for modern tech standards, BigCommerce (NASDAQ: BIGC) provides a SaaS platform that enables businesses to build and manage online stores, connect with marketplaces, and integrate with point-of-sale systems.

Why Is BIGC Risky?

Products, pricing, or go-to-market strategy may need some adjustments as its 3.9% average billings growth over the last year was weak
Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its three-year trend
Persistent operating margin losses suggest the business manages its expenses poorly

BigCommerce is trading at $4.99 per share, or 1.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than BIGC.

Barrett (BBSI)

Market Cap: $1.20 billion

Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ: BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions.

Why Does BBSI Give Us Pause?

Modest revenue base of $1.20 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
Free cash flow margin dropped by 10.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Waning returns on capital imply its previous profit engines are losing steam

Barrett’s stock price of $46.81 implies a valuation ratio of 20.3x forward P/E. If you’re considering BBSI for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Watch:

Dave (DAVE)

Market Cap: $2.96 billion

Named after the biblical David fighting financial Goliaths, Dave (NASDAQ: DAVE) is a digital financial services platform that helps Americans living paycheck to paycheck with cash advances, banking services, and tools to improve their financial health.

Why Do We Watch DAVE?

Market share has increased this cycle as its 35.3% annual revenue growth over the last two years was exceptional
Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 82% outpaced its revenue gains

At $218.88 per share, Dave trades at 23.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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