Small-cap stocks can be volatile. That volatility can result in significant torque to the upside. Stocks with smaller capitalizations are largely unfollowed by large investors and institutions.
However, as small-cap companies execute, deliver good results, and get more attention from retail investors, larger and larger investors take notice. Big investors have a lot more capital to deploy. So, when they start buying, it can rapidly propel a small-cap stock upwards.
When you find a good small-cap stock, you don’t want to sleep on that idea. It can start to work very quickly if the market starts to get wind.
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Firan Technologies: A small-cap stock that could soar more
One example of this dynamic is Firan Technologies (TSX: FTG). It has a market cap of $254 million today. The company was trading with a market cap between $180 million and $200 million earlier this year. However, after it delivered first-quarter results wherein its backlog rose 43%, revenues rose 23%, and adjusted net earnings increased 214%, the market took notice.
FTG stock shot up from a 2025 low of $7.18 in April to a high of $12.78 by September. That was a 78% gain in less than six months. Since then, the stock has pulled back 15% to around $10. However, the point is that even boring small-cap stocks can move very fast.
Firan still looks to be an attractive stock long term. It provides cockpit components, circuit boards, airborne hardware, and communications devices. The commercial airline industry has a decade of backlog demand. Although small today, Firan has made smart acquisitions that have expanded its market share.
The company targets an average of 15% annual growth. It is likely to supersede that this year. If it can keep executing with smart acquisitions and solid organic growth, Firan should continue to perform well for patient investors.
Propel: A high risk but high reward stock at a low valuation
Propel Holdings (TSX: PRL) is another small-cap stock you don’t want to sleep on. It only has a market cap of $1 billion. PRL stock has had a challenging year. It is down 28% year-to-date. Despite the decline, it is still up 155% in the past five years.
Propel provides small, short-term loans to non-prime consumers. This is a riskier segment that tends to have a hard time finding credit at the major banks. Propel has designed a lending platform powered by artificial intelligence. It can quickly contemplate thousands of variables to underwrite a loan approval or not.
While it lends directly to consumers, it also provides lending-as-a-service to smaller banks and credit unions. This business has seen strong uptake this year.
Propel has been delivering very strong growth. Revenues are up by a 43% compounded annual growth rate (CAGR) in the past three years. Earnings per share have risen by a 125% CAGR.
The lender recently acquired an operation in the U.K. This provides another large market for Propel to grow into. The acquisition will be marginally dilutive to margins in the near term while it integrates lending platforms. However, it should pay off with a large growth opportunity in the long term.
At $25 per share, Propel only trades with a forward price-to-earnings ratio of seven. This small-cap stock also has a nice 2% yield. On a price-to-growth ratio, PRL stock looks very cheap. However, it is a riskier business that is economically sensitive, so position size accordingly.
