4 small and mid-caps to watch, and 1 to avoid after a 400% run

The micro, small, and mid-cap spaces comes with higher risk but also greater reward potential. Picking high-calibre stocks and knowing when to move on can make all the difference. It’s an approach that helped Brittany Isakka and the team at Spheria Asset Management achieve standout returns of 20–35% across their key strategies in 2024.

As part of Livewire’s 2025 Outlook Series, Isakka shared how the changing nature of markets keeps her motivated and excited.

“I love that there’s something new every day. Markets are always changing - there’s always a new stock or fresh IPO to look at. It’s exciting and makes coming to work enjoyable, knowing there’s so much variety,” she says.

So, what’s the secret to success in the micro, small, and mid-cap space?

“We look for businesses with good free cash flow, sound balance sheets, and valuation support,” Isakka explains.

In this interview, she highlights four standout stocks that fit these criteria, spanning technology, fintech, and healthcare; all with compelling growth or turnaround potential.

But as she explains, knowing when to bail out or avoid certain companies, no matter how tempting they may seem, is crucial for consistent success in an otherwise volatile space. She highlights one stock that’s surged 400% in the past year as an example.

“This company is valued at $2 billion, has a 19-year record of not generating earnings and it has blown through $1 billion of cash flow. It's a business we'd prefer to avoid."

Watch the full video to hear Isakka discuss:

• Her detailed thesis on four stocks Spheria likes right now (and the one she doesn’t)
• Why companies with messy histories sometimes deserve a closer look
• How her team navigates the dynamic small-cap market