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.
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. 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:
Kura Sushi (KRUS)
Market Cap: $671 million
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ: KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Does KRUS Give Us Pause?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $55.39 per share, Kura Sushi trades at 35.8x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than KRUS.
Strategic Education (STRA)
Market Cap: $1.87 billion
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.
Why Are We Out on STRA?
- Number of domestic students has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share fell by 5.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin is expected to remain in place over the coming year
Strategic Education’s stock price of $80.46 implies a valuation ratio of 13.4x forward P/E. To fully understand why you should be careful with STRA, check out our full research report (it’s free for active Edge members).
One Small-Cap Stock to Buy:
Payoneer (PAYO)
Market Cap: $2.07 billion
Founded during the early days of global e-commerce in 2005 to solve international payment challenges, Payoneer (NASDAQ: PAYO) provides financial technology services that enable small and medium-sized businesses to send and receive payments globally across borders.
Why Will PAYO Beat the Market?
- Annual revenue growth of 28.2% over the past five years was outstanding, reflecting market share gains this cycle
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Payoneer is trading at $5.81 per share, or 20.3x forward P/E. Is now the time to initiate a position? Find out 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 6 Stocks for this week. 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-small-cap company Comfort Systems (+782% 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.
