Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
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 are two small-cap stocks that could be the next big thing and one that may have trouble.
One Small-Cap Stock to Sell:
ICU Medical (ICUI)
Market Cap: $3.23 billion
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Does ICUI Fall Short?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.6% annually over the last two years
- Performance over the past five years shows its incremental sales were less profitable, as its 2.9% annual earnings per share growth trailed its revenue gains
- Underwhelming 0.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
ICU Medical’s stock price of $129.05 implies a valuation ratio of 14.9x forward P/E. Dive into our free research report to see why there are better opportunities than ICUI.
Two Small-Cap Stocks to Watch:
Remitly (RELY)
Market Cap: $4.54 billion
With Amazon founder Jeff Bezos as an early investor, Remitly (NASDAQ: RELY) is an online platform that enables consumers to safely and quickly send money globally.
Why Is RELY a Top Pick?
- Has the opportunity to boost monetization through new features and premium offerings as its active customers have grown by 28.4% annually over the last two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 247% over the last three years outstripped its revenue performance
- Free cash flow margin jumped by 35.2 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $21.44 per share, Remitly trades at 9.9x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
iRhythm (IRTC)
Market Cap: $3.84 billion
Pioneering the shift from bulky, short-term heart monitors to sleek, wire-free patches, iRhythm Technologies (NASDAQ: IRTC) provides wearable cardiac monitoring devices and AI-powered analysis services that help physicians detect and diagnose heart rhythm disorders.
Why Does IRTC Catch Our Eye?
- Impressive 23.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 27.5% over the last five years outstripped its revenue performance
- Free cash flow margin is now positive, indicating the company has passed a significant test
iRhythm is trading at $117.02 per share, or 327.3x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
