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.
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 could be down big.
One Small-Cap Stock to Sell:
Xponential Fitness (XPOF)
Market Cap: $288.4 million
Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.
Why Is XPOF Risky?
- Muted 2.5% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.3% for the last two years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $8.21 per share, Xponential Fitness trades at 13.1x forward P/E. If you’re considering XPOF for your portfolio, see our FREE research report to learn more.
Two Small-Cap Stocks to Watch:
OSI Systems (OSIS)
Market Cap: $4.96 billion
With security scanners deployed at airports and borders worldwide and patient monitors used in hospitals across the globe, OSI Systems (NASDAQ:OSIS) designs and manufactures specialized electronic systems for security screening, patient monitoring, and optoelectronic applications.
Why Will OSIS Beat the Market?
- Annual revenue growth of 16.6% over the past two years was outstanding, reflecting market share gains this cycle
- Additional sales over the last two years increased its profitability as the 23.4% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 2.4 percentage points over the last five years, giving the company more chips to play with
OSI Systems is trading at $291.94 per share, or 27.3x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
TTM Technologies (TTMI)
Market Cap: $10.44 billion
As one of the world's largest printed circuit board manufacturers with facilities spanning North America and Asia, TTM Technologies (NASDAQ:TTMI) manufactures printed circuit boards (PCBs) and radio frequency (RF) components for aerospace, defense, automotive, and telecommunications industries.
Why Is TTMI Interesting?
- Impressive 10.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Projected revenue growth of 11.6% for the next 12 months suggests its momentum from the last two years will persist
- Earnings per share grew by 32.4% annually over the last two years and trumped its peers
TTM Technologies’s stock price of $101.68 implies a valuation ratio of 36.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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.