1 Small-Cap Stock Worth Your Attention and 2 That Underwhelm
Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.
The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. Keeping that in mind, 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:
Bumble (BMBL)
Market Cap: $382.2 million
Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ:BMBL) is a leading dating app built with women at the center.
Why Are We Hesitant About BMBL?
- Struggled with new customer acquisition as its paying users averaged 3.1% declines
- Platform has lost its luster lately as engagement trends have been sluggish and its average revenue per buyer has declined by 16.8% annually
- Forecasted revenue decline of 10.5% for the upcoming 12 months implies demand will fall off a cliff
At $2.96 per share, Bumble trades at 2.8x forward EV/EBITDA. Read our free research report to see why you should think twice about including BMBL in your portfolio.
Transcat (TRNS)
Market Cap: $838.1 million
Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies.
Why Are We Wary of TRNS?
- Issuance of new shares over the last two years caused its earnings per share to fall by 11.1% annually while its revenue grew
- Underwhelming 7.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Transcat’s stock price of $89.82 implies a valuation ratio of 52.5x forward P/E. To fully understand why you should be careful with TRNS, check out our full research report (it’s free).
One Small-Cap Stock to Watch:
HubSpot (HUBS)
Market Cap: $10.74 billion
Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE:HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.
Why Do We Like HUBS?
- Billings have averaged 22.3% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- Software is difficult to replicate at scale and leads to a stellar gross margin of 83.7%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
HubSpot is trading at $213.85 per share, or 3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
