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. Keeping that in mind, here are two small-cap stocks that could be the next big thing and one that could be down big.

One Small-Cap Stock to Sell:

Progyny (PGNY)

Market Cap: $2.04 billion

Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ: PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.

Why Does PGNY Give Us Pause?

1. Revenue base of $1.24 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Estimated sales growth of 4.8% for the next 12 months implies demand will slow from its two-year trend
3. Underwhelming 0.6% return on capital reflects management’s difficulties in finding profitable growth opportunities

Progyny is trading at $23.21 per share, or 14.1x forward P/E. To fully understand why you should be careful with PGNY, check out our full research report (it’s free).

Two Small-Cap Stocks to Watch:

Watts Water Technologies (WTS)

Market Cap: $9.24 billion

Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Why Are We Fans of WTS?

1. Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 45.5%
2. Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
3. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

At $277 per share, Watts Water Technologies trades at 28.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Primerica (PRI)

Market Cap: $8.72 billion

With a sales force of over 140,000 licensed representatives operating on an independent contractor model, Primerica (NYSE: PRI) provides term life insurance, investment products, and other financial services to middle-income households in the United States and Canada.

Why Do We Watch PRI?

1. Pre-tax profits and efficiency rose over the last four years as it benefited from some fixed cost leverage
2. Share buybacks propelled its annual earnings per share growth to 18.8%, which outperformed its revenue gains over the last five years
3. Industry-leading 26.7% return on equity demonstrates management’s skill in finding high-return investments

Primerica’s stock price of $269.34 implies a valuation ratio of 3.7x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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