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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.

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. That said, here are two small-cap stocks that could be the next 100 baggers and one that may have trouble.

One Small-Cap Stock to Sell:

Tenable (TENB)

Market Cap: $4.42 billion

Founded in 2002 by three cybersecurity veterans, Tenable (NASDAQ:TENB) provides software as a service that helps companies understand where they are exposed to cyber security risk and how to reduce it.

Why Does TENB Worry Us?

1. Sales trends were unexciting over the last three years as its 18.5% annual growth was below the typical software company

2. Estimated sales growth of 8.8% for the next 12 months implies demand will slow from its three-year trend

3. Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability

At $36.49 per share, Tenable trades at 4.7x forward price-to-sales. Check out our free in-depth research report to learn more about why TENB doesn’t pass our bar.

Two Small-Cap Stocks to Watch:

Fiverr (FVRR)

Market Cap: $951.6 million

Based in Tel Aviv, Fiverr (NYSE:FVRR) operates a fixed price global freelance marketplace for digital services.

Why Are We Fans of FVRR?

1. Customer spending is rising as the company has focused on monetization over the last two years, leading to 13.8% annual growth in its average revenue per buyer

2. Prominent and differentiated platform leads to a stellar gross margin of 82.4%

3. Incremental sales significantly boosted profitability as its annual earnings per share growth of 58.6% over the last three years outstripped its revenue performance

Fiverr’s stock price of $26.38 implies a valuation ratio of 11.9x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Exact Sciences (EXAS)

Market Cap: $8.48 billion

With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ:EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.

Why Does EXAS Catch Our Eye?

1. Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 15.3% over the past two years

2. Adjusted operating margin improvement of 21.5 percentage points over the last two years demonstrates its ability to scale efficiently

3. Earnings per share grew by 12.6% annually over the last five years, comfortably beating the peer group average