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.
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 are two small-cap stocks that could be the next big thing and one that may have trouble.
One Small-Cap Stock to Sell:
Kosmos Energy (KOS)
Market Cap: $1.60 billion
Operating in some of the world's deepest waters with projects located up to 120 kilometers offshore, Kosmos Energy (NYSE: KOS) explores for, develops, and produces oil and natural gas from deepwater offshore fields.
Why Do We Think Twice About KOS?
- Annual revenue growth of 9.9% over the last five years was below our standards for the energy upstream and integrated energy sector
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Kosmos Energy’s stock price of $2.69 implies a valuation ratio of 12.8x forward P/E. Dive into our free research report to see why there are better opportunities than KOS.
Two Small-Cap Stocks to Buy:
Dycom (DY)
Market Cap: $10.41 billion
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.
Why Is DY a Good Business?
- Annual revenue growth of 15.2% over the past two years was outstanding, reflecting market share gains this cycle
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Additional sales over the last two years increased its profitability as the 21.1% annual growth in its earnings per share outpaced its revenue
Dycom is trading at $347.73 per share, or 23.9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
SEI Investments (SEIC)
Market Cap: $9.54 billion
Founded in 1968 as Simulated Environments Inc. to train bank loan officers using computer simulations, SEI Investments (NASDAQ: SEIC) provides technology platforms, investment management, and operational solutions for financial institutions, wealth managers, and investors.
Why Will SEIC Beat the Market?
- Decent 9.4% annual revenue growth over the last two years beat most of its peers, showing customers find value in its products and services
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 26.5% exceeded its revenue gains over the last two years
- ROE punches in at 26.7%, illustrating management’s expertise in identifying profitable investments
At $78.04 per share, SEI Investments trades at 13.8x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
