Small-capitalization companies represent high-risk endeavors. At the same time, they generally carry higher reward potential. Basically, it comes down to a mathematical concept. Because both the price and expectations for such diminutive enterprises are deflated, when they generate positive momentum, the reaction could be quite intense. That’s why speculators continue to pour money into small-cap stocks.

That said, prospective participants should be aware of the dangers of this ecosystem. While even a modest bit of good news could send shares skyrocketing, the opposite is also true: bad news could render disproportionately substantial damage. Because of this reality, investors really shouldn’t go overboard with ideas in this space: it’s all about calculated risks and tight money management.

Still, temptation abounds not just because of the upward potential; rather, it’s possible for less-heralded equities to deliver strong returns in a short amount of time. With that in mind, below are small-cap stocks to consider.

McEwen Mining (MUX)

Based in Toronto, Canada, McEwen Mining (NYSE:MUX) falls under the basic material sector, specifically, precious metal mining. Per its public profile, McEwen engages in the exploration, development, production and sales of gold and silver deposits in the U.S., Canada, Mexico and Argentina. With the Federal Reserve hinting at lower benchmark interest rates, MUX stock could rise on inflationary implications.

While the narrative is intriguing, investors should realize that financially, McEwen is risky. For example, in the first quarter of this year, the loss of 56 cents per share badly missed the expected red ink of 10 cents. In the past four quarters, the average loss per share landed at 61 cents. This too unfavorably exceeded the consensus view of 57 cents in the red.

That said, it’s possible that MUX stock could see growth ahead. Right now, shares trade at 2.54X trailing-year sales. Between Q1 2023 to Q1 2024, this metric stood at 2.87X. Thus, MUX might grow into its prior valuation.

Analysts see fiscal 2024 sales hitting $304.82 million. If so, that would be 34.2% up from last year, making MUX one of the small-cap stocks to consider.

Krispy Kreme (DNUT)

A popular retailer and wholesaler of doughnuts and other baked confectioneries, Krispy Kreme (NASDAQ:DNUT) operates a chain of retail shops. It also distributes its highly desired (and some would say addictive) products through grocery stores, convenience shops and similar retail outlets. Thanks to its strong brand, extensive footprint and relatively affordable product pricing, DNUT may see increased growth.

On a financial note, Krispy Kreme is emblematic of small-cap stocks in terms of unevenness: sometimes it’s on and sometimes it’s not. In the most recent Q1 report, Krispy posted an EPS of seven cents, beating the consensus target of six cents. However, in the past year, the average EPS was seven cents, slipping against the consensus average by a penny.

Still, DNUT stock may enjoy upward potential thanks to its fundamental pricing. Presently, shares trade hands at 1.07X sales. In the past year, this metric stood at 1.53X. Again, Krispy might grow into its prior valuation.

Analysts see fiscal 2024 sales hitting $1.79 billion, up 5.9% from last year’s print of $1.69 billion. However, the big result could come in the following year, when the top line may possibly rise to $1.98 billion. That would be up 10.8%, making DNUT one of the small-cap stocks to consider.

Dorian LPG (LPG)

Specializing in the midstream component of the hydrocarbon value chain, Dorian LPG (NYSE:LPG) represents a specialist in liquified petroleum gas; hence, its ticker symbol LPG. It owns and operates a fleet of very large gas carriers (or VLGCs), transporting LPG around the world. Increased global activity should theoretically boost Dorian. As well, geopolitical dynamics add urgency to the business model.

Generally speaking, Dorian is a consistent financial performer. In Q1, the company posted EPS of $1.91, beating the consensus view of $1.83. In the past year, the company’s average EPS stood at $1.90, beating out the collective view of $1.66. Therefore, the average earnings surprise landed at 14.2%.

Where circumstances get tricky is in the valuation. Right now, shares trade hands at 2.99X sales. This figure represents a slight premium compared to the prior year’s print of 2.83X. However, analysts see current year sales slipping to $480.59 million, down 14.3%. So, why bother with LPG stock?

The high-side estimate calls for $569 million. Considering worsening geopolitical dynamics, that target could be more realistic due to increased demand. Thus, LPG represents one of the small-cap stocks to put on your radar.

Edgewise Therapeutics (EWTX)

A clinical-stage biopharmaceutical firm, Edgewise Therapeutics (NASDAQ:EWTX) focuses on developing therapies for critical muscle disorders. Its lead product candidate addresses vexing conditions such as Duchenne muscular dystrophy. Fundamentally, Edgewise may see increased demand due to the importance of addressing significant unmet medical needs.

As with other high-risk small-cap stocks within the clinical biotech space, Edgewise isn’t profitable. However, it’s mitigating expected losses. For example, in Q1, the company incurred a loss of 33 cents per share. This figure beat the expected print of 39 cents in the red. Overall, in the past four quarters, Edgewise posted an “earnings” surprise of 4.65%.

In terms of valuation, it’s difficult to assign value to EWTX stock. Currently, the company doesn’t generate sales and isn’t projected to over the next two years. Further, losses per share may wide in fiscal 2025 to $1.98, which is noticeably worse than 2023’s print of $1.58 below parity.

That said, analysts rate EWTX stock a unanimous strong buy with a $34.60 average price target. Further, the most optimistic target calls for $48 per share.

BioCryst Pharmaceuticals (BCRX)

A biotechnology firm that designs and develops novel small-molecule medicines, BioCryst Pharmaceuticals (NASDAQ:BCRX) focuses on addressing rare diseases. Part of the attractiveness of BioCryst is that its drugs are administered orally, thus being more palatable than needles. In addition, BCRX stock may rise as pharmaceutical companies begin to earnestly address prior gaps in the rare disease segment.

As with other small-cap stocks in the clinical space, BioCryst will require patience. It’s not profitable yet, which may be distracting for some prospective buyers. Further, in the past four quarters, the company posted a loss per share of 27 cents. However, covering experts anticipated a loss of 23 cents. Therefore, the “earnings” surprise came out to almost 17% below parity.

On the positive side, BioCryst generates revenue, though this comes at a premium. BCRX stock trades hands for 4.34X trailing-year revenue. In the past year, this metric was 4.22X.

Nevertheless, the main focus could be on the forecast. Analysts believe year-end sales will rise to $402.24 million, up 21.4% from last year’s tally of $331.41 million.

GigaCloud Technology (GCT)

Operating an online business-to-business (B2B) marketplace for large parcel merchandise, GigaCloud Technology (NASDAQ:GCT) offers end-to-end solutions for particularly bulky products. These include furniture and appliances. Fundamentally, GigaCloud may benefit from the greater surge in e-commerce. Thanks to enhanced economies of scale, going online has become the first choice for both individuals and businesses.

One benefit of targeting GCT as one of the small-cap stocks is the underlying financial performance. In Q1, the company posted earnings per share of 84 cents, beating the consensus view of 62 cents. Overall, in the past four quarters, GigaCloud posted earnings of 71 cents per share. This figure handily beat analysts’ expectations of 49 cents, yielding an earnings surprise of almost 44%.

However, the performance comes at a cost. Right now, shares trade at 1.41X sales, above the prior year’s average metric of 0.87X. At the same time, analysts project significant growth in the business. By the end of this year, revenue might hit $1.06 billion, up 51% from 2023’s haul of $703.83 million. And 2025 sales may rise again to $1.35 billion, making it a worthwhile (albeit speculative) idea.

ACM Research (ACMR)

Based in Fremont, California, ACM Research (NASDAQ:ACMR) falls under the semiconductor equipment and materials industry. Specifically, ACM develops and manufactures single-wafer wet cleaning equipment for enhancing the manufacturing process. Fundamentally, the company’s innovative approach to cleaning critical equipment is essential for the broader semiconductor value chain. And because it’s still relatively underappreciated, ACMR stock has the potential to pop dramatically higher.

However, those that may be interested in ACM should consider conducting their due diligence quickly. In Q1, the company posted EPS of 52 cents, beating the consensus view of 33 cents. During the past year since the Q1 report, ACM delivered EPS of 50 cents. This figure blew past analysts’ expectations calling for 24 cents, yielding an earnings surprise of 144.53%.

Interestingly, ACMR stock is relatively undervalued despite the robust performance. Right now, shares trade at 1.92X sales. In the past year, this metric stood at 2.51X. Therefore, the company might grow into its prior valuation.

For fiscal 2024, analysts see revenue hitting $702.72 million, up 26% from last year’s tally of $557.72 million. Fiscal 2025 sales might rise again to $869.61 million, up 23.7%.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.