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.
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 are two small-cap stocks that could amplify your portfolio’s returns and one best left ignored.
One Small-Cap Stock to Sell:
STAAR Surgical (STAA)
Market Cap: $1.32 billion
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ:STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Do We Pass on STAA?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 13.8% annually over the last two years
- Free cash flow margin dropped by 29.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $26.62 per share, STAAR Surgical trades at 46x forward P/E. Dive into our free research report to see why there are better opportunities than STAA.
Two Small-Cap Stocks to Buy:
monday.com (MNDY)
Market Cap: $3.45 billion
With its colorful interface of boards, columns, and automation that replaced the chaos of spreadsheets, monday.com (NASDAQ:MNDY) is a cloud-based work operating system that helps teams manage projects, track tasks, and streamline workflows through customizable interfaces.
Why Will MNDY Outperform?
- Customers view its software as mission-critical to their operations as its ARR has averaged 26.9% growth over the last year
- Prominent and differentiated software results in a best-in-class gross margin of 89.2%
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
monday.com’s stock price of $68 implies a valuation ratio of 2.5x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Viper Energy (VNOM)
Market Cap: $9.29 billion
Operating a business model that requires no drilling rigs or production equipment of its own, Viper Energy (NASDAQ:VNOM) owns mineral and royalty interests in oil and gas properties, collecting revenue when operators extract resources from land.
Why Will VNOM Beat the Market?
- Annual revenue growth of 34% over the last ten years was superb and indicates its market share increased during this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 100%
- EBITDA margin expanded by 5.4 percentage points over the last five years as it scaled and became more efficient
Viper Energy is trading at $47.99 per share, or 17.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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.