2 Small-Cap Stocks Worth Your Attention and 1 We Find Risky

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

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 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:

Stitch Fix (SFIX)

Market Cap: $696.5 million

One of the original subscription box companies, Stitch Fix (NASDAQ:SFIX) is an online personal styling and fashion service that curates personalized clothing selections for customers.

Why Do We Pass on SFIX?

1. Sluggish trends in its active clients suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 0.5% for the last two years
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

At $5.21 per share, Stitch Fix trades at 0.5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SFIX.

Two Small-Cap Stocks to Watch:

Gorman-Rupp (GRC)

Market Cap: $1.30 billion

Powering fluid dynamics since 1934, Gorman-Rupp (NYSE:GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.

Why Could GRC Be a Winner?

1. Annual revenue growth of 13.5% over the last five years was superb and indicates its market share increased during this cycle
2. Sales pipeline is in good shape as its backlog averaged 12.7% growth over the past two years
3. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 33% annually

Gorman-Rupp is trading at $49.37 per share, or 22.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

Astronics (ATRO)

Market Cap: $1.97 billion

Integrating power outlets into many Boeing aircraft, Astronics (NASDAQ:ATRO) is a provider of technologies and services to the global aerospace, defense, and electronics industries.

Why Is ATRO a Good Business?

1. Annual revenue growth of 12.9% over the past two years was outstanding, reflecting market share gains this cycle
2. Free cash flow margin increased by 10.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
3. Rising returns on capital show the company is starting to reap the benefits of its past investments

Astronics’s stock price of $56.33 implies a valuation ratio of 23.9x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. 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-micro-cap company Kadant (+351% 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.