Most investors spend 90% of their time talking about the same 7 stocks.

The Mag 7 dominate headlines. They dominate ETFs. They dominate attention.

But some of the best long-term upside doesn’t come from $2T companies.

It comes from smaller businesses that are still early in their growth curve.

Today I want to break down a group of small-cap stocks (under $5B market cap) that I believe have asymmetric long-term potential — if execution continues.

These aren’t “lottery tickets.” They’re businesses with real revenue, improving fundamentals, and identifiable catalysts.

Let’s dive in.

Zeta Global is one of the cleanest small-cap setups in the market right now.

They’re guiding to roughly $1.5B+ in revenue with adjusted EBITDA margins above 20%, and free cash flow generation continues to scale. That combination — double-digit revenue growth plus expanding margins — is what I look for in early compounders.

The key here is operating leverage. As the AI-powered marketing platform scales, incremental revenue drops to the bottom line more efficiently.

This is growth, but it’s disciplined growth.

Oscar Health operates in a massive, complex industry: health insurance.

Revenue has grown meaningfully year over year, and the company has been improving operating efficiency. The swing factor remains medical cost trends, but scale is improving and administrative costs as a percentage of revenue have been trending better.

Healthcare can lead during rotations away from crowded tech trades. If capital shifts and Oscar continues improving margins, this could be a multi-year rerating story.

High volatility. High upside.

The Cheesecake Factory isn’t flashy. That’s exactly why I like it.

Revenue remains strong, traffic trends have held up better than many expected, and margins have stabilized. They’re also continuing measured unit expansion.

When expectations are low but execution is steady, restaurants can quietly outperform.

This isn’t a 10x stock.

But it could be a very steady long-term compounder with dividends and buybacks adding support.

Fubo is not for the faint of heart.

But here’s what matters: revenue scale, subscriber growth, and improving profitability metrics. The Hulu Live TV combination adds meaningful scale to the business.

Cash on the balance sheet gives them runway. The key question is whether they can drive sustainable profitability as they scale.

This is a speculative growth name — but with real numbers behind it.

DLocal gives global companies the infrastructure to process payments in emerging markets.

Revenue growth has been strong. Total payment volume continues to expand. The long-term thesis is simple: as emerging markets digitize, payment infrastructure becomes critical.

Margins have fluctuated, but the structural growth story remains intact.

This is a long-duration growth story tied to global digitization.

AbCellera is not a typical biotech.

It’s a discovery platform that partners with pharmaceutical companies to develop antibodies. They have dozens of programs in development and a strong balance sheet relative to many early-stage biotech firms.

This is not a short-term earnings story.

It’s a long-term optionality play tied to innovation in biologics.

Root is a turnaround story in auto insurance.

They’ve made progress on underwriting discipline and improving the combined ratio. Profitability has started to stabilize.

Insurance is brutally competitive. Execution has to stay tight.

But if underwriting continues improving, equity rerating can happen quickly in this space.

The Honest Company has been restructuring operations and refining its channel mix.

Revenue growth hasn’t been explosive, but the bull case is margin improvement and operational simplification.

This is a patience play tied to brand durability and retail execution.

Legacy Education is smaller and less followed.

Revenue growth has been strong year over year, driven by enrollment gains. Smaller companies like this can move significantly if growth continues and margins scale.

Position sizing matters here.

Small caps have underperformed for years relative to mega caps.

Valuation compression has been real.

But historically, small caps tend to outperform when capital rotates and when earnings growth stabilizes.

They are volatile.

They require patience.

They demand discipline in sizing.

But they can also drive outsized returns when fundamentals inflect.

The key is separating real businesses from pure speculation.

Revenue growth.
Margin improvement.
Free cash flow potential.
Balance sheet strength.

That’s what I focus on.

Not every one of these will win.

That’s not how small-cap investing works.

But if even a few execute over the next 5–7 years, the upside can meaningfully outperform the broader market.

This is where long-term investors can quietly build asymmetric positions while most people are distracted by whatever is trending.

I’m currently building out my value-focused long-term strategy on Surmount.

Inside, I break down:

• How I screen for growth + cash flow
• How I evaluate margin expansion
• How I size small-cap positions
• How I think about risk management

If you want to follow the framework behind these picks and see how I structure portfolios around them, I’ll be sharing more soon.

Stay tuned.

This newsletter is for informational and educational purposes only and does not constitute financial advice. I am not a financial advisor. Investing involves risk, including the potential loss of principal. All opinions expressed are my own and based on publicly available information at the time of writing. Always do your own research and consult with a qualified financial professional before making investment decisions.