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 is one small-cap stock that could be the next big thing and two that could be down big.
Two Small-Cap Stocks to Sell:
Marcus & Millichap (MMI)
Market Cap: $1.05 billion
Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Why Is MMI Risky?
- Annual revenue growth of 1.3% over the last five years was below our standards for the consumer discretionary sector
- Poor free cash flow margin of 3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Marcus & Millichap is trading at $26.91 per share, or 60.2x forward P/E. If you’re considering MMI for your portfolio, see our FREE research report to learn more.
ASGN (ASGN)
Market Cap: $2.16 billion
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
Why Do We Pass on ASGN?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.2% annually over the last two years
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
ASGN’s stock price of $50.47 implies a valuation ratio of 10.1x forward P/E. Check out our free in-depth research report to learn more about why ASGN doesn’t pass our bar.
One Small-Cap Stock to Watch:
Sprouts (SFM)
Market Cap: $7.51 billion
Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products.
Why Are We Fans of SFM?
- Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 7.7% growth over the past two years
- Notable projected revenue growth of 8.7% for the next 12 months hints at market share gains
At $77.28 per share, Sprouts trades at 13.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.