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 is one small-cap stock that could be the next big thing and two best left ignored.
Two Small-Cap Stocks to Sell:
FTI Consulting (FCN)
Market Cap: $5.50 billion
With a team of experts deployed across 30+ countries to tackle complex business challenges, FTI Consulting (NYSE: FCN) is a global business advisory firm that helps organizations manage change, mitigate risk, and resolve disputes across financial, legal, operational, and regulatory matters.
Why Do We Think Twice About FCN?
- 4.2% annual revenue growth over the last two years was slower than its business services peers
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6.8% annually
- Free cash flow margin dropped by 7.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
FTI Consulting’s stock price of $183.33 implies a valuation ratio of 19.7x forward P/E. Check out our free in-depth research report to learn more about why FCN doesn’t pass our bar.
DigitalBridge (DBRG)
Market Cap: $2.83 billion
Transforming from a traditional real estate investor to a digital-focused powerhouse in 2021, DigitalBridge Group (NYSE: DBRG) is a global digital infrastructure investment firm that manages capital and operates assets across data centers, cell towers, fiber networks, and edge infrastructure.
Why Do We Avoid DBRG?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 68.3% annually over the last five years
- Earnings per share have contracted by 14.1% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
At $15.44 per share, DigitalBridge trades at 2.2x forward P/E. To fully understand why you should be careful with DBRG, check out our full research report (it’s free).
One Small-Cap Stock to Buy:
IMAX (IMAX)
Market Cap: $2.17 billion
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Do We Love IMAX?
- Annual revenue growth of 24.5% over the past five years was outstanding, reflecting market share gains this cycle
- Free cash flow margin expanded by 24.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
IMAX is trading at $40.13 per share, or 23.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
