Small-cap stocks are considered riskier than large caps or even mid caps. Of course, this means that smaller stocks have greater potential for making profits for investors.

That does not mean that you should buy risky stocks randomly. Some due diligence will help you find winners that can overcome the risks to move higher and provide you with good returns. (See also: An Introduction to Small-Cap Stocks.)

We have selected four top small-cap stocks that are already winners and that look like they offer a good possibility for more growth. Let's look at these four stocks more closely to see what is driving their prices. All figures are current as of Dec. 5, 2017.

Lithia Motors, Inc. (LAD)

This company is an automobile retailer. It earns its living selling new and used cars, as well as warranties, parts, insurance and maintenance services. The company operates in three divisions – imports, luxury cars and domestic vehicles – and it offers more than 30 brands of automobiles.

The stock is trying to leave the small-cap category as it moves upward, giving the company a market capitalization of $3.06 billion. After a drop in February through April 2017, the stock has started climbing again in a high-volume breakout. The 50-day moving average has crossed above the 200-day moving average – this technical signal is known as a "golden cross" because it bodes well for the stock's future. After a brief downturn in October 2017, the stock headed upward again and is now trading near its all-time high. (See also: Lithia Motors Q3 Earnings Miss, Revenues Top Estimates.)

The Brink's Company (BCO)

This is the famous armored car company. Apparently, transferring cash has been earning cash for Brinks. Income has been climbing for the past four quarters. Of course, the company performs more high-tech tasks than merely driving sacks of money around. It also provides "intelligent" safes, offers cash management services, processes bill payments and designs security systems.

The chart shows that Brink's stock had a high-volume breakout in early February 2017 and followed through with several more up days. It has climbed since then, rising sharply again in July. This is a confirmed uptrend that is part of an already existing uptrend that began in July 2016. Investors would be wise to buy on low-volume pullbacks, which are nearly inevitable. It appears that such pullbacks occurred in the second half of October 2017 and moving into December 2017, so it may be a good time to buy Brink's shares. (For more, see: Top 3 Growth Stocks for 2017.)

  • Average Volume: 541,026
  • Market Cap: $3.948 billion
  • P/E Ratio (TTM): 46.55
  • EPS (TTM): $1.68
  • Dividend and Yield: $0.60 (0.74%)

Spectrum Pharmaceuticals Inc. (SPPI)

Spectrum is a biotech company, so there is added risk here. Biotech stocks can soar or sink based on a single product. Spectrum Pharmaceuticals has six products, none of which you may have heard of because they are for the treatment of cancer and some exotic diseases. The company has some significant licensing agreements, and it collaborates with other drug companies.

This small-cap stock had a high-volume breakout in November 2016, and after moving sideways for a while, it moved sharply higher. The stock price soared again at the end of September 2017 on news that lung cancer drug poziotinib showed success in early clinical trials. More positive news on the drug sent the stock even higher in October. Despite these recent gains, this biotech play could be a winner for investors who believe that the stock has more room to run. (See also: Spectrum Q2 Loss Narrower Than Expected, Sales Beat.)

  • Average Volume: 1,855,164
  • Market Cap: $1.898 billion
  • P/E Ratio (TTM): -19.07
  • EPS (TTM): -$0.999
  • Dividend and Yield: $0.00 (0.00%)

Axcelis Technologies, Inc. (ACLS)

This is a semiconductor company that sells equipment to manufacturers of semiconductor chips. The stock dropped precipitously in November 2016 but recovered immediately and began to march higher.

Axcelis has a product called Purion that is finding great demand, and the company projected 2017 revenue to grow 19% over last year's numbers. In September 2017, the stock price skyrocketed in response to the company obtaining large orders for its Purion systems from several top chip makers, and the stock's significant gains continued through October 2017. Although the stock price ticked downward at the end of November and into December, possibly owing to profit taking after the strong performance, the company's solid positioning suggests a chance for continued upside. (For more, see: The Industry Handbook: The Semiconductor Industry.) 

  • Average Volume: 716,182
  • Market Cap: $918.836 million
  • P/E Ratio (TTM): 31.38
  • EPS (TTM): $0.93
  • Dividend and Yield: N/A (N/A)

The Bottom Line

Too often, investors see a stock with a long winning streak and assume that they missed the time to get in. However, buying small caps that are trending upwards can be a winning strategy. (For additional reading, check out: Small Cap Investing: How to Think About Illiquidity.)

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