3 Small-Cap Stocks with Mounting Challenges

Listen up, investors! We're diving into the wild world of small-cap stocks, where the thrills and chills are off the charts. These stocks are the underdogs of the market, but they come with their own set of challenges that you need to be aware of. Let's get into it!

First up, let's talk about the elephant in the room: VOLATILITY. Small-cap stocks are like a rollercoaster ride—one minute you're soaring to the moon, the next you're plummeting to the ground. This is because small-cap companies are often younger and less established, making them more susceptible to market swings and economic downturns. For instance, take a look at KULR Technology Group Inc (KULR) with a 988.53% return and AST SpaceMobile Inc (ASTS) with an 812.85% return. These stocks have seen massive gains, but they could just as easily see massive losses. So, buckle up and be prepared for the ride!

Next, let's talk about the risk of FRAUD. Small-cap companies are more likely to be targets of fraudulent schemes due to their smaller size and less stringent regulatory oversight. This is a real concern, and it's something you need to be aware of when investing in small-cap stocks. The article mentions, "Small-cap stocks can also be more fertile territory for fraudulent activity." So, do your due diligence and stay vigilant!

Lastly, let's talk about CAPITAL ACCESS. Small-cap companies often have less access to capital compared to their larger counterparts. This can limit their ability to invest in growth opportunities and expand their operations. The article notes that "Small-cap companies are often young companies. They tend to have significant growth potential, but they also are generally less stable than their larger, more established peers. Often they are unprofitable." This lack of stability and profitability can make it difficult for small-cap companies to attract investors and secure funding.

Now, let's take a look at some specific small-cap stocks that are facing these challenges.

DXP Enterprises Inc. (DXPE) is a so-called MRO specialist, meaning it focuses on "maintenance, repair and operating" services to its customers. This is a core set of activities that are necessary to keep a business's facilities and production processes running smoothly. There are several business segments of note that rely on DXP, but the big reason for recent momentum in this small-cap stock is DXP's expertise in the energy business via maintenance of pumps, safety gear and other must-have equipment. The firm has deep roots serving the oil and gas industry, stretching back to the early days of Big Oil in Texas, and is a natural beneficiary of any increase in domestic oil production. With talks of tariffs on external supplies and oil industry CEO Chris Wright recently nominated by President-elect Donald Trump as the next Secretary of Energy, the environment in Washington seems set up to favor DXP and its customers in 2025.

Gatos Silver Inc. (GATO) is a mining stock that's engaged in the exploration, development and production of precious metals. That includes not only silver but also zinc, lead, copper and gold that tends to be found alongside its existing mineral deposits. With inflation a continued concern, hard assets like silver remain in high demand – and GATO has seen incredibly impressive results lately as a result. That includes record revenue and cash flow reported last quarter, with both metrics up more than 60% over the prior year. "Junior" miners of this size can be very sensitive to commodity markets, but these recent results coupled with a favorable sector outlook make this a small-cap stock to buy in 2025.

Global Partners LP (GLP) is a leader in gasoline and diesel distribution, primarily engaged in the logistics of transporting gasoline, kerosene, propane and other fossil fuels to wholesalers as well as operating its own consumer-focused retail filling stations. A few years ago, GLP seemed like a very bad bet amid the rise of electric vehicles and alternative energy, but investors have moved away from green energy thanks to the war in Ukraine disrupting global energy supplies and waning focus from U.S. policymakers. Shares are up slightly more than the S&P 500 on the year, and GLP stock is up about 55% from its 52-week low this summer on hopes of a friendly regulatory environment in Washington and continued growth in the year to come.

So, there you have it! Three small-cap stocks with mounting challenges. But remember, with great risk comes great reward. So, do your homework, stay vigilant, and happy investing!