Investing in 2020 has not been without its challenges. The unprecedented coronavirus disease 2019 (COVID-19) pandemic led to historic levels of uncertainty in the market. During the first quarter, this uncertainty resulted in the fastest bear-market plunge of all time. Yet, when things come to a close in 15 days, the benchmark S&P 500 will probably be up by a double-digit percentage.

While many facets of the market have participated in this broad-based bounce, small-cap stocks have been left in the shadows. The S&P 600 SmallCap Index is trailing the S&P 500 by a full seven percentage points in the return column on a year-to-date basis.

However, that could change in a big way in 2021. The rollout of coronavirus vaccines, coupled with historically low lending rates, provide a favorable environment for higher-growth (and higher-risk) small-cap stocks to thrive. If you have $5,000 at the ready, consider putting that money to work in the following three small-cap stocks, all of which have the real potential to double.

A dollar sign rising up out of the financial section of the newspaper.

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Big money has been flowing into technology and healthcare throughout 2020, but I think you'd better put that money to work in modular furniture developer and retailer Lovesac (NASDAQ:LOVE). Even with its shares up 141% this year, through this past weekend, Lovesac has shown that it deserves a healthy premium.

While most furniture manufacturers have been clobbered by COVID-19, Lovesac has been virtually unstoppable. Even after closing many of its permanent and pop-up showrooms for customer safety, Lovesac was able to pivot to online sales. These direct-to-consumer sales have grown by a triple-digit percentage in each of the past two quarters. They are responsible for approximately two-thirds of fiscal 2021 revenue.

Aside from investing in omnichannel selling opportunities and looking for additional showroom partners, such as its recent online launch with Best Buy, Lovesac is also differentiating itself with its furniture. Its sactionals, which are responsible for the lion's share of revenue, can be rearranged in hundreds of different combinations to perfectly fit a buyer's livable space. The yarn used in its sactionals is also made using 100% recycled plastic water bottles. This ESG-friendly company perfectly appeals to eco-conscious millennial buyers

Despite the pandemic's adverse effect on retail stocks, Lovesac managed to generate an adjusted profit in the fiscal third quarter. It has also grown net sales by 35% in the first nine months of fiscal 2021. With double-digit sales growth potential for years to come, this company still offers plenty of upside. 

A gloved processor trimming a cannabis flower.

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Jushi Holdings

U.S.-focused marijuana stocks also offer plenty of upside, with small-cap multistate operator Jushi Holdings (OTC:JUSHF) standing out from the crowd.

Jushi's uniqueness comes from its focus on limited license states -- i.e., states that only issue a certain number of total licenses, or licenses within an outlined area or jurisdiction. Jushi is betting big on Pennsylvania, Virginia, and Illinois, all of which limit the number of licenses they assign. This should allow the company to secure a healthy amount of market share in each of these states without having to worry too much about competition.

The company has also leaned on acquisitions to bolster its presence in limited license markets. For example, it purchased its way into Illinois. Jushi currently has two operational locations in the Land of Lincoln, but expects to double this to four stores. Illinois is expected to generate $1 billion or more in annual weed sales by 2024, providing plenty of opportunity for Jushi to grow its recreational business.

But maybe the most exciting thing about this rapidly growing marijuana stock is that its executives and insiders have skin in the game. Of the roughly $250 million in capital Jushi has raised since its inception, $45 million has come from management and insiders. When the interests of management and shareholders align, good things usually happen.

Considering that Wall Street anticipates Jushi will quadruple its full-year sales over the next two years, it looks like the perfect candidate to double in the cannabis space.

A close-up of a one ounce silver ingot on a dark background.

Image source: Getty Images.

First Majestic Silver

Another small-cap stock with the potential to double investors' money is precious-metal miner First Majestic Silver (NYSE:AG).

The outlook for gold and silver stocks has just about never been more lustrous. In response to the coronavirus-induced recession, Federal Reserve Chair Jerome Powell has said the nation's central bank will keep interest rates at or near record-tying lows through 2023. Historically low yields and a ballooning money supply usually boost gold and silver prices. First Majestic Silver, which currently has three operational mines, will benefit from these higher prices.

That's not the only tailwind here. Silver demand is expected to increase notably this decade as U.S. and global reliance on renewable energy picks up. According to the CPM Group Silver Yearbook (2020), auto sector demand for silver has more than quadrupled since 2009. Silver is being used in solar roofs, electric engines, and battery packs in electric vehicles. Similarly, demand for silver used in solar panels has nearly quadrupled since 2009. There's no mining stock with more direct exposure to silver (65% of revenue) than First Majestic Silver.

Furthermore, investments in the company's key assets are beginning to pay off. At its La Encantada silver mine, recent changes to milling operations have boosted precious-metal recovery rates. Meanwhile, converting Santa Elena to natural gas power will help lower operating costs at one of the company's most efficient mines. With a 2020 all-in sustaining cost forecast of $12.29 per silver ounce to $13.45 per silver ounce, First Majestic appears set to deliver potentially record cash flow in the years to come. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.