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.
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 is one small-cap stock that could be the next big thing and two that may have trouble.
Two small-cap stocks to sell:
fuboTV (FUBO)
Market cap: $248.6 million
Originally launched as a soccer streaming platform, fuboTV (NYSE: FUBO) is a video streaming service specializing in live sports, news, and entertainment content.
Why Are We Wary of FUBO?
- Footprint is expanding as its domestic subscribers have grown at a decent pace
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Cash-burning history makes us doubt the long-term viability of its business model
fuboTV’s stock price of $8.15 implies a valuation ratio of 33.5x forward P/E. Check out our free in-depth research report to learn more about why FUBO doesn’t pass our bar.
Western Union (WU)
Market cap: $2.06 billion
With a history dating back to 1851 when it began as a telegraph company, Western Union (NYSE: WU) is a global money transfer service that enables consumers and businesses to send funds across borders and currencies, typically within minutes.
Why Do We Steer Clear of WU?
- Sales tumbled by 4.5% annually over the last five years, showing market trends are working against it during this cycle
- Sales were less profitable over the last five years as its earnings per share fell by 6.5% annually, worse than its revenue declines
At $6.81 per share, Western Union trades at 4.3x forward P/E. If you’re considering WU for your portfolio, see our FREE research report to learn more.
One small-cap stock to watch:
Custom Truck One Source (CTOS)
Market cap: $2.30 billion
Inspired by a family gas station, Custom Truck One Source (NYSE: CTOS) is a distributor of trucks and heavy equipment.
Why Are We Positive on CTOS?
- Impressive 11.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating margin expanded by 3.9 percentage points over the last five years as it scaled and became more efficient
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Custom Truck One Source is trading at $10.14 per share, or 40.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks we like even more
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
