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 are two small-cap stocks that could be the next big thing and one that may have trouble.
One Small-Cap Stock to Sell:
Cushman & Wakefield (CWK)
Market Cap: $3.23 billion
With expertise in the commercial real estate sector, Cushman & Wakefield (NYSE: CWK) is a global Chicago-based real estate firm offering a comprehensive range of services to clients.
Why Are We Out on CWK?
- Annual sales growth of 6% over the last five years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Poor free cash flow margin of 1.3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
Cushman & Wakefield is trading at $13.78 per share, or 9.1x forward P/E. To fully understand why you should be careful with CWK, check out our full research report (it’s free).
Two Small-Cap Stocks to Watch:
Core & Main (CNM)
Market Cap: $8.15 billion
Formerly a division of industrial distributor HD Supply, Core & Main (NYSE: CNM) is a provider of water, wastewater, and fire protection products and services.
Why Are We Fans of CNM?
- Impressive 14.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Performance over the past two years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin increased by 8.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Core & Main’s stock price of $43.40 implies a valuation ratio of 14.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Riley Exploration Permian (REPX)
Market Cap: $727.2 million
Operating in counties where legacy oil fields have been producing since the early 1900s, Riley Exploration Permian (NYSE: REPX) drills for and produces oil and natural gas from horizontal wells in the Permian Basin of West Texas and New Mexico.
Why Is REPX a Top Pick?
- Impressive 30.8% annual revenue growth over the last eight years indicates it’s winning market share this cycle
- Highly-profitable operating model results in strong unit economics and a best-in-class gross margin of 76.6%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $33.51 per share, Riley Exploration Permian trades at 4.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive 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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
