1 Small-Cap Stock for Long-Term Investors and 2 We Question

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.

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. That said, here is one small-cap stock that could be the next big thing and two that may have trouble.

Two Small-Cap Stocks to Sell:

Domo (DOMO)

Market Cap: $262.9 million

Named for the Japanese word meaning "thank you very much," Domo (NASDAQ:DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.

Why Do We Avoid DOMO?

1. Offerings struggled to generate interest as its billings were flat over the last year
2. Anticipated sales growth of 1.3% for the next year implies demand will be shaky
3. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low

At $6.29 per share, Domo trades at 0.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than DOMO.

Evolent Health (EVH)

Market Cap: $360.5 million

Founded in 2011 to transform how healthcare is delivered to patients with complex needs, Evolent Health (NYSE:EVH) provides specialty care management services and technology solutions that help health plans and providers deliver better care for patients with complex conditions.

Why Are We Hesitant About EVH?

1. Sales trends were unexciting over the last two years as its 7.1% annual growth was below the typical healthcare company
2. Negative returns on capital show that some of its growth strategies have backfired, and its shrinking returns suggest its past profit sources are losing steam
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Evolent Health is trading at $3.27 per share, or 15.1x forward P/E. Read our free research report to see why you should think twice about including EVH in your portfolio.

One Small-Cap Stock to Buy:

Globalstar (GSAT)

Market Cap: $8.57 billion

Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ:GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.

Why Will GSAT Beat the Market?

1. Impressive 15.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Robust free cash flow margin of 32.9% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
3. Returns on capital are increasing as management’s prior bets are starting to bear fruit

Globalstar’s stock price of $67.82 implies a valuation ratio of 186.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

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 9 Market-Beating Stocks. 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.