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 is one small-cap stock that could be the next big thing and two that may have trouble.
Two Small-Cap Stocks to Sell:
Domo (DOMO)
Market Cap: $262.9 million
Named for the Japanese word meaning "thank you very much," Domo (NASDAQ: DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.
Why Do We Avoid DOMO?
- Offerings struggled to generate interest as its billings were flat over the last year
- Anticipated sales growth of 1.3% for the next year implies demand will be shaky
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
At $6.29 per share, Domo trades at 0.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DOMO.
Evolent Health (EVH)
Market Cap: $360.5 million
Founded in 2011 to transform how healthcare is delivered to patients with complex needs, Evolent Health (NYSE: EVH) provides specialty care management services and technology solutions that help health plans and providers deliver better care for patients with complex conditions.
Why Are We Hesitant About EVH?
- Sales trends were unexciting over the last two years as its 7.1% annual growth was below the typical healthcare company
- Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Evolent Health is trading at $3.27 per share, or 15.1x forward P/E. Read our free research report to see why you should think twice about including EVH in your portfolio.
One Small-Cap Stock to Buy:
Globalstar (GSAT)
Market Cap: $8.57 billion
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ: GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Why Will GSAT Beat the Market?
- Impressive 15.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Robust free cash flow margin of 32.9% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Globalstar’s stock price of $67.82 implies a valuation ratio of 186.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
