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. 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:
Transcat (TRNS)
Market Cap: $589 million
Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies.
Why Do We Think Twice About TRNS?
- Efficiency has decreased over the last five years as its operating margin fell by 2.5 percentage points
- Issuance of new shares over the last two years caused its earnings per share growth of 2.7% to lag its revenue gains
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Transcat’s stock price of $63.10 implies a valuation ratio of 31x forward P/E. If you’re considering TRNS for your portfolio, see our FREE research report to learn more.
BOK Financial (BOKF)
Market Cap: $8.01 billion
Tracing its roots back to 1910 when Oklahoma was still a young state, BOK Financial (NASDAQ:BOKF) is a regional bank holding company that provides commercial banking, consumer banking, and wealth management services across eight states in the central and southwestern US.
Why Do We Steer Clear of BOKF?
- Sales trends were unexciting over the last five years as its 2.2% annual growth was below the typical banking company
- Annual net interest income growth of 3.7% over the last five years was below our standards for the banking sector
- Net interest margin of 2.8% is well below other banks, signaling its loans aren’t very profitable
BOK Financial is trading at $132 per share, or 1.3x forward P/B. Dive into our free research report to see why there are better opportunities than BOKF.
One Small-Cap Stock to Buy:
Paymentus (PAY)
Market Cap: $3.71 billion
Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE:PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.
Why Will PAY Beat the Market?
- Impressive 39% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 86.3% annual growth in its earnings per share outpaced its revenue
At $29.44 per share, Paymentus trades at 42x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our Top 6 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.