1 Small-Cap Stock with Promising Prospects and 2 That Underwhelm

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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one small-cap stock that could amplify your portfolio’s returns and two best left ignored.

Two Small-Cap Stocks to Sell:

ZoomInfo (GTM)

Market Cap: $922.5 million

Operating a platform it calls "RevOS" - short for Revenue Operating System - ZoomInfo (NASDAQ:GTM) provides sales, marketing, and recruiting teams with business intelligence and analytics to identify prospects and deliver targeted outreach.

Why Is GTM Risky?

1. Customers had second thoughts about committing to its platform over the last year as its billings plateaued
2. Estimated sales decline of 5.9% for the next 12 months implies an even more challenging demand environment
3. Projected 3.9 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position

ZoomInfo is trading at $3.13 per share, or 0.8x forward price-to-sales. Dive into our free research report to see why there are better opportunities than GTM.

SoundHound AI (SOUN)

Market Cap: $2.73 billion

Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ:SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.

Why Is SOUN Not Exciting?

1. Sky-high servicing costs result in an inferior gross margin of 40.6% that must be offset through increased usage
2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
3. Cash-burning history makes us doubt the long-term viability of its business model

At $6.31 per share, SoundHound AI trades at 11.2x forward price-to-sales. To fully understand why you should be careful with SOUN, check out our full research report (it’s free).

One Small-Cap Stock to Watch:

Acuity Brands (AYI)

Market Cap: $10.12 billion

One of the pioneers of smart lights, Acuity (NYSE:AYI) designs and manufactures light fixtures and building management systems used in various industries.

Why Are We Fans of AYI?

1. Offerings and unique value proposition resonate with customers, as seen in its above-market 9.8% annual sales growth over the last two years
2. Offerings are mission-critical for businesses and lead to a best-in-class gross margin of 45.7%
3. Free cash flow margin increased by 8.6 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Acuity Brands’s stock price of $339.85 implies a valuation ratio of 15.7x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.