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Small-cap stocks can deliver explosive gains -- or sizable losses. Choose well, and these high-risk yet potentially high-reward stocks can deliver multibagger returns and turbocharge your portfolio's overall performance. But choose poorly, and a small-cap stock can produce painful losses, up to and including a complete loss of capital should the business be forced into bankruptcy.

That's why it's so important to invest in only the best of these businesses -- those that are poised to benefit from undeniable long-term trends, possess the strongest competitive advantages, and enjoy the largest growth opportunities. Read on to learn about one such business that meets these challenging criteria -- and that's one of the best small-cap stocks available in the market today.

Image source: CyberArk Software.

The cybersecurity specialist  

Cyber attacks continue to grow in size and scope -- 177 million personal records were exposed in data breaches in 2015, according to the Identity Theft Resource Center, up from 85.6 million records in 2014.

To guard against those attacks, typical cybersecurity systems utilize firewalls and threat-detection tools to protect against external threats. Yet a September report (link opens PDF) from Intel (NASDAQ:INTC) Security found that 43% of data breaches were actually caused by internal actors.

Enter CyberArk Software (NASDAQ:CYBR), a leader in "privileged account" security solutions, which help to protect against the most advanced cyber threats -- those that use insider privileges to penetrate network perimeters and attack the most vital aspects of an enterprise's IT infrastructure. 

CyberArk serves more than 2,800 businesses, including 45% of the Fortune 100 and more than 25% of the Global 2000. Yet that's only a small fraction of the companies that could benefit from CyberArk's services, particularly as small and mid-size businesses come to understand the importance of strengthening their cybersecurity defenses in the coming years. In fact, CEO Udi Mokady said during a recent conference call that CyberArk is "just scratching the surface" of its tremendous market opportunity.

The company is moving aggressively to fulfill that potential by rapidly expanding its client base, both within its core enterprise segment and in fast-growing adjacent areas such as government organizations, hospitals, and mid-sized businesses.

Additionally, CyberArk is strengthening its alliances with the providers of ancillary cybersecurity solutions such as Intel Security and threat prevention specialist FireEye (NASDAQ:FEYE), which should help to further insulate CyberArk from the competition.

These moves have helped CyberArk deliver impressive revenue growth, including a 37% year-over-year increase to $55 million in the third quarter. And unlike many of its fellow cybersecurity companies, CyberArk is profitable on a GAAP basis, with the company earning a net income margin of nearly 13% in Q3. That comes even as CyberArk is investing heavily into research and development to strengthen its product arsenal, as well as to significantly expand its sales force -- two moves that should lead to even higher sales and profits in the years ahead.

Moreover, CyberArk has a pristine balance sheet, with nearly $275 million in cash and investments and zero long-term debt. Along with its strong cash generation -- including more than $36 million in operating cash flow during the first nine months of 2016 -- CyberArk should have all the capital it needs to reinvest in its business and fuel its torrid growth.

Combined, these competitive advantages should allow CyberArk to continue to expand its share of the increasingly important market for privileged account security. In turn, CyberArk appears set to deliver solid returns to long-term investors. And it's possible that those gains could come even sooner, as CyberArk -- at its current market cap of only about $1.7 billion -- could make for an attractive acquisition target for a larger security company.

With multiple ways to win, CyberArk is an excellent small-cap stock to consider buying today.

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends FireEye. The Motley Fool recommends CyberArk Software and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.