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 best left ignored.
One Small-Cap Stock to Sell:
Five9 (FIVN)
Market Cap: $1.7 billion
Taking its name from the "five nines" (99.999%) standard for optimal service reliability in telecommunications, Five9 (NASDAQ: FIVN) provides cloud-based software that enables businesses to run their contact centers with tools for customer service, sales, and marketing across multiple communication channels.
Why Is FIVN Risky?
- Products, pricing, or go-to-market strategy may need some adjustments as its 9.4% average billings growth over the last year was weak
- Estimated sales growth of 10.1% for the next 12 months implies demand will slow from its two-year trend
- Gross margin of 55.5% reflects its high servicing costs
Five9 is trading at $22.01 per share, or 1.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than FIVN.
Two Small-Cap Stocks to Watch:
Doximity (DOCS)
Market Cap: $4.81 billion
With over 80% of U.S. physicians as members of its digital community, Doximity (NYSE: DOCS) operates a digital platform that enables physicians and other healthcare professionals to collaborate, stay current with medical news, manage their careers, and conduct virtual patient visits.
Why Are We Positive On DOCS?
- Annual revenue growth of 29.3% over the past five years was outstanding, reflecting market share gains
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Strong free cash flow margin of 48.2% enables it to reinvest or return capital consistently
Doximity’s stock price of $25.99 implies a valuation ratio of 7.6x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Chord Energy (CHRD)
Market Cap: $7.75 billion
Holding the largest acreage position in the Williston Basin, Chord Energy (NASDAQ: CHRD) drills for and produces crude oil, natural gas liquids, and natural gas in North Dakota's Williston Basin.
Why Do We Love CHRD?
- Market share has increased this cycle as its 21.8% annual revenue growth over the last ten years was exceptional
- $5.33 billion in revenue gives its scale, which leads to bargaining power with suppliers and retailers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $138.35 per share, Chord Energy trades at 7.7x 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
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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
