3 Small-Cap Stocks Set to Outperform Through 2026

The discussion on Wall Street is almost entirely dominated by tech giants and AI stocks that are trading at nosebleed valuations. In the meantime, there are many up-and-coming companies with even better upside potential in the long run. Small-cap stocks remain unpopular this year, but as interest rate cuts start, I expect interest to be reinvigorated here. The Russell 2000 Index remains flat year-to-date, but there are still winners if you search deep enough.

The risk is obviously higher with small-cap stocks, but they can give you multibagger returns in a very short amount of time. It is a good idea to dedicate a small portion of your holdings to these stocks. If even one of these companies goes on to become a big-name company in the future, it can boost your portfolio massively.

Here are three to look into:

Climb Global Solutions (CLMB)

Climb Global Solutions (NASDAQ:CLMB) is a value-added IT distribution and solutions company. It acts as a middleman in the tech supply chain. Climb Global focuses on red-hot sectors like cloud computing and data center products.

CLMB stock has climbed (pun intended) 447% in the past five years as it fills the gap for increasing software demand in many emerging sectors. The stock is up 44% in the past year alone, and it is one of the only few small-cap companies that are solidly profitable.

Climb Global Solutions posted 73% year-over-year revenue growth to $159.28 million in Q2 2025 and grew net income to almost $6 million, up 94% year-over-year. This beat expectations by 40.64% on the top line. The price-to-earnings ratio is below 20 times, whereas the PEG ratio is just 0.62. A peg ratio below 1 usually points to undervaluation.

On top of all that, Climb Global has almost no debt and $29 million on its balance sheet. Revenue is likely to keep growing fast, and the ongoing data center + computing megatrend makes me believe better days are ahead.

CLMB also comes with a 0.56% dividend yield to sweeten the deal.

Frequency Electronics (FEIM)

Frequency Electronics (NASDAQ:FEIM) sells high-precision timing and frequency control products. These products are used for space and military operations, and the demand for them is growing fast.

Frequency Electronics’ products are built to operate in extreme conditions and could benefit significantly from the Golden Dome for America project and increased spending for drones. Its products are also useful for telecommunications and data transmission. It also has quantum computing exposure.

It is already seeing significant demand, as the backlog is at $70 million. Revenue in the most recent quarter increased 28.3% year-over-year to almost $20 million. Satellite payload sales doubled to $12.1 million, with net income increasing 21.8% to $3.2 million.

The company pays occasional special dividends due to the strong growth and profitability. FEIM stock is up 133.4% in just the past year and has plenty more room to run, since it still trades at just 12 times earnings. It has $5 million in cash on its balance sheet with $9 million of debt.

United States Antimony (UAMY)

United States Antimony Corporation (NYSEAMERICAN:UAMY) is a mining and materials company. It mainly focuses on selling antimony, zeolite, and other materials. The biggest positive catalyst is a government investment in the company, like the one MP Materials (NYSE:MP) got.

However, companies are also rushing to secure a stable domestic supply of precious materials that are necessary for manufacturing. This has already led to the stock surging by 897% over the past year as revenue grew 128% to $7 million in Q1 2025.

The antimony segment grew 140% year-over-year to $5.9 million. Zeolite sales also rose 82% to $1.1 million, and further growth is ahead as the company is now looking to capture more market share for critical minerals from industrial and defense companies. There are ongoing expansions at the Montana smelter to boost its throughput capacity by more than six times by the end of this year. Plus, Alaska operations could start soon, which would allow it to collect antimony from there and process it in Montana.

Analysts see nearly 231% EPS growth next, with triple-digit sales growth continuing through 2027, with revenue potentially reaching over $150 million in 2027. You’re paying less than 17 times the expected 2026 earnings.

Any setbacks in Q2 would certainly be costly, but I still see significant long-term potential as the U.S. expands its domestic supply for critical minerals.

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