1 Small-Cap Stock Worth Your Attention and 2 That Underwhelm

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.

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 is one small-cap stock that could be the next big thing and two that could be down big.

Two Small-Cap Stocks to Sell:

Bumble (BMBL)

Market Cap: $382.2 million

Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ:BMBL) is a leading dating app built with women at the center.

Why Are We Hesitant About BMBL?

1. Struggled with new customer acquisition as its paying users averaged 3.1% declines
2. Platform has lost its luster lately as engagement trends have been sluggish and its average revenue per buyer has declined by 16.8% annually
3. Forecasted revenue decline of 10.5% for the upcoming 12 months implies demand will fall off a cliff

At $2.96 per share, Bumble trades at 2.8x forward EV/EBITDA. Read our free research report to see why you should think twice about including BMBL in your portfolio.

Transcat (TRNS)

Market Cap: $838.1 million

Serving the pharmaceutical, industrial manufacturing, energy, and chemical process industries, Transcat (NASDAQ:TRNS) provides measurement instruments and supplies.

Why Are We Wary of TRNS?

1. Issuance of new shares over the last two years caused its earnings per share to fall by 11.1% annually while its revenue grew
2. Underwhelming 7.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Transcat’s stock price of $89.82 implies a valuation ratio of 52.5x forward P/E. To fully understand why you should be careful with TRNS, check out our full research report (it’s free).

One Small-Cap Stock to Watch:

HubSpot (HUBS)

Market Cap: $10.74 billion

Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE:HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.

Why Do We Like HUBS?

1. Billings have averaged 22.3% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
2. Software is difficult to replicate at scale and leads to a stellar gross margin of 83.7%
3. Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale

HubSpot is trading at $213.85 per share, or 3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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 meet near-term momentum — both boxes checked at the same time.

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.