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 poised to benefit from undeniable long-term trends and enjoy the largest growth opportunities. Read on to learn about one such business that meets these challenging criteria -- and that is one of the small-cap stocks best positioned to reward investors in the years ahead.

Cycle class

Image source: Mindbody.

Mindbody (MB) provides cloud-based software solutions to the health and wellness industry: Think spas, yoga studios, and fitness classes. It's a massive market that's gone largely underserved -- and Mindbody is working to address that need.

Mindbody's all-in-one solution helps its clients manage nearly every aspect of their businesses. Need to post an online class schedule and allow your clients to book appointments through their smartphones? Mindbody has you covered. Want an easy way to manage your employees' schedules? No problem. How about processing payments? Mindbody can help you with that, too.

With plans starting at just $75 per month, Mindbody's offerings are affordable even for start-ups with the most limited financial resources. And an increasing number of larger businesses are utilizing Mindbody's more extensive -- and higher-priced -- packages. In this way, Mindbody is able to scale its business along with the success of its customers.

More than 60,000 businesses have turned to Mindbody's platform for these solutions. That's up from less than 34,000 subscribers in the first quarter of 2014. During this time, Mindbody's revenue has nearly doubled from $70 million in 2014 to $139 million last year.

Still, Mindbody is not yet profitable, which is likely why its stock is currently trading for around $27; properly valuing early-stage growth companies can be difficult. But at that price, Mindbody's current $1.1 billion market cap drastically understates its market potential. The 60,000 businesses Mindbody currently serves are just a tiny fraction -- about 1.5% -- of the 4.2 million wellness businesses that the company says exists around the world. And its $139 million in revenue is just a smidgeon of the $9.5 billion that Mindbody estimates as the current size of its addressable market -- a market that itself is growing, as more people come to understand the benefits of fitness and overall healthier living. That's a massive untapped opportunity that could offer Mindbody years -- and potentially even decades -- of strong growth.

Mindbody's powerful network effects should allow it to capture the lion's share of this immense market. Each new user expands the base of potential customers for Mindbody's business clients, and each business that joins Mindbody's platform increases the number of wellness offerings that users can choose among. It's a virtuous cycle that should continue to grow stronger as Mindbody expands its user and subscriber counts in the coming years.

To further strengthen its ecosystem, Mindbody reached a deal with Under Armour (UA -0.46%) (UAA -1.04%) that lets the more than 180 million users of Under Armour's MyFitnessPal app sign up for classes offered by Mindbody's subscribers. Mindbody also has a partnership with Alphabet's Google (GOOGL 0.83%) (GOOG 0.72%) allowing people in several major cities to book classes listed on Mindbody directly through Google Search and Maps. These two titans choosing to partner with Mindbody is a major vote of confidence for its platform, and I wouldn't be surprised if a company like Under Armour makes a bid for Mindbody at some point in the future.

All told, Mindbody is a leader in a huge and expanding industry with the ability to grow its market share exponentially in the years ahead. And at current prices, Mindbody offers long-term investors a chance at multibagger-type returns in the coming decade. That makes this currently small-cap stock a great buy today.