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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. 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:
Myriad Genetics (MYGN)
Market Cap: $380.7 million
Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ:MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.
Why Are We Bearish on MYGN?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Issuance of new shares over the last five years caused its earnings per share to fall by 7.4% annually while its revenue grew
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
Myriad Genetics’s stock price of $3.98 implies a valuation ratio of 0.5x forward price-to-sales. Read our free research report to see why you should think twice about including MYGN in your portfolio.
Two Small-Cap Stocks to Watch:
Littelfuse (LFUS)
Market Cap: $9.67 billion
The developer of the first blade-type automotive fuse, Littelfuse (NASDAQ:LFUS) provides electrical protection and control components for the automotive, industrial, electronics, and telecommunications industries.
Why Could LFUS Be a Winner?
- Market share is on track to rise over the next 12 months as its 18.3% projected revenue growth implies demand will accelerate from its two-year trend
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 22.8% annually
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
Littelfuse is trading at $382.63 per share, or 20.4x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
PJT (PJT)
Market Cap: $3.51 billion
Spun off from Blackstone in 2015 and founded by former Morgan Stanley executive Paul J. Taubman, PJT Partners (NYSE:PJT) is an advisory-focused investment bank that provides strategic advice, restructuring services, and fundraising solutions to corporations, boards, and investment firms.
Why Is PJT Interesting?
- Market share has increased this cycle as its 20.6% annual revenue growth over the last two years was exceptional
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROE punches in at 27.8%, illustrating management’s expertise in identifying profitable investments
At $137.17 per share, PJT trades at 17.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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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.