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.
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 best left ignored.
One Small-Cap Stock to Sell:
Simply Good Foods (SMPL)
Market Cap: $1.07 billion
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ: SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Why Do We Steer Clear of SMPL?
- Sales trends were unexciting over the last three years as its 6% annual growth was below the typical consumer staples company
- Forecasted revenue decline of 5.4% for the upcoming 12 months implies demand will fall off a cliff
- Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 24.4 percentage points
Simply Good Foods is trading at $11.85 per share, or 7x forward P/E. Read our free research report to see why you should think twice about including SMPL in your portfolio.
Two Small-Cap Stocks to Watch:
Dutch Bros (BROS)
Market Cap: $7.94 billion
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE: BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Why Is BROS on Our Radar?
- Fast expansion of new restaurants to reach markets with few or no locations is justified by its same-store sales growth
- Average same-store sales growth of 5.8% over the past two years indicates its restaurants are resonating with diners
- Free cash flow margin jumped by 2.8 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Dutch Bros’s stock price of $57.57 implies a valuation ratio of 58.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Mirion (MIR)
Market Cap: $4.41 billion
With its technology protecting workers in over 130 countries and equipment used in 80% of cancer centers worldwide, Mirion Technologies (NYSE: MIR) provides radiation detection, measurement, and monitoring solutions for medical, nuclear energy, defense, and scientific research applications.
Why Should You Buy MIR?
- Annual revenue growth of 10.8% over the last five years was superb and indicates its market share increased during this cycle
- Adjusted operating margin expanded by 10.5 percentage points over the last five years as it scaled and became more efficient
- Free cash flow margin increased by 8.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $18.20 per share, Mirion trades at 4.4x trailing 12-month price-to-sales. Is now a good time to buy? 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.
