Wall Street offers plenty of small-cap investment ideas, but not all smaller firms are profit-making, and the chances of such investments paying off big or going to zero are about equal, notes market research site Simply Wall St. Georgiy Timoshin, a financial analyst at Freedom Finance Global, highlights two currently-unprofitable small-cap companies that may appeal to investors with a high tolerance for risk.

Freedom Finance analyst highlights two small caps for risk-tolerant investors

On Wednesday, October 16, the Russell 2000 and S&amp;P SmallCap 600 indexes, which comprise small- and mid-cap stocks, hit their highest levels in nearly three years. While investors are snapping up small caps, some observers, like Michael Kantrowitz, the chief investment strategist at investment bank Piper Sandler, are <a href="https://www.reuters.com/markets/us/futures-steady-nasdaq-higher-markets-await-bank-earnings-2024-10-16/">yet to be convinced</a> of a wider rotation into the segment.

Small-cap indexes hit three-year highs

Shares of three nuclear energy companies soared on Wednesday, October 16, following Amazon’s announcement of investments to build new nuclear reactors. The retail and tech giant thus joined Microsoft and Alphabet in turning to nuclear to meet its growing power needs, driven by cloud services and AI.

Nuclear energy stocks soar after Amazon backs advanced reactor technology

Shares of Lexaria Bioscience, a company that transforms the delivery of other companies’ drugs using its patented technology, <a href="https://www.nasdaq.com/market-activity/stocks/lexx">fell</a> more than 6% on Tuesday, October 15, after it <a href="https://ir.lexariabioscience.com/news-events/press-releases/detail/271/lexaria-announces-5-million-registered-direct-offering">announced</a> a raise of around $5 million through a private placement.

Weight-loss market innovator Lexaria Bioscience drops after direct offering announced

Shares of Sidus Space, a space services company, <a href="https://www.nasdaq.com/market-activity/stocks/sidu">plummeted</a> around 16% in trading on Tuesday, October 15, following the <a href="https://ir.stockpr.com/sidusspace/sec-filings-email/content/0001493152-24-041072/forms-1.htm">announcement</a> of the company’s third stock offering this year. The latest is expected to nearly double the company's outstanding shares.

Sidus Space sells off after new stock offering announced

Over the past 12 months, merger and acquisition activity has increased across various sectors, <a href="https://seekingalpha.com/news/4158335-stronger-ma-activity-among-small-caps-will-boost-their-performance-analyst">notes</a> Jefferies U.S. small- and mid-cap strategist Steven DeSanctis. This bodes well for the small-cap segment, since most deals involve smaller companies and improve their efficiency and performance.

Pickup in M&amp;A activity bodes well for small caps — Jefferies analyst

On Monday, October 14, shares of Longboard Pharmaceuticals, which is developing medicines for neurological diseases, <a href="https://www.marketwatch.com/investing/stock/lbph">surged</a> more than 50% after the company <a href="https://ir.longboardpharma.com/news-releases/news-release-details/lundbeck-acquire-longboard-pharmaceuticals-strategic-deal">announced</a> a deal to be acquired by its Danish peer Lundbeck. The transaction is valued at $2.6 billion, almost 14% above Longboard’s current market capitalization.

Longboard Pharma soars after announcing acquisition by Danish peer

Small-cap stocks — companies with a market capitalization of between $250 million and $2 billion — can be a valuable addition to many portfolios, as they sometimes produce outsized returns, <a href="https://www.fool.com/investing/2024/10/13/the-best-small-cap-tech-stocks-to-invest-1000-in-r/">points out</a> the Motley Fool in an article highlighting three smaller companies worth investing $1,000 in right now.

The Motley Fool spotlights three small caps to invest in right now

The dominance of the so-called "Magnificent Seven" stocks — the major tech companies that fueled the equity market's growth in 2023-2024 — appears to be coming to an end. The main reason, <a href="https://www.barrons.com/articles/small-cap-stocks-buy-sell-06ebd942">according</a> to Mark Sherlock, who runs a U.S. small- and mid-cap fund at Federated Hermes in London, is overinflated expectations around large-cap stocks. He has identified four companies that investors should consider as alternatives to Big Tech names. These companies vary in size but share a key feature — "the power of low expectations."

Federated Hermes analyst names four alternatives to Big Tech stocks

Quotes on Universal Insurance Holdings, Florida's largest private insurer, closed nearly 12% higher on Thursday, October 10, as Hurricane Milton, which hit the state's Gulf of Mexico coast on Wednesday-Thursday, turned out to be less destructive than anticipated. Experts had estimated that the hurricane could cause up to $10 billion in insured losses, with the worst-case scenario at $100 billion.

Shares of insurer Universal rise 12% after Hurricane Milton weaker than expected

The game of golf is growing at an impressive pace in the U.S.. In 2023, more than a third of Americans over the age of five either played golf, followed the game, or listened to a golf-related podcast — a 30% increase versus 2016, <a href="https://www.ngf.org/golf-industry-research/">according</a> to the National Golf Foundation (NGF). The small company TruGolf aims to capitalize on this growing enthusiasm, producing golf simulators and rolling out a franchise network. What should potential investors know about it?

How small-cap TruGolf is trying to profit from making golf more accessible

At the start of trading today, Thursday, October 10, shares of fintech company IDT Corporation, a provider of communications and payment services, climbed nearly 4% to hit their highest level in almost three years. This followed a 21% gain the previous day. The surge is attributable to announced financial results for the fiscal-2024 fourth quarter and full year, featuring a 368% jump in earnings per share (EPS) and profitability across all four of the company’s core business segments in the quarter.

Small caps