While large-cap stocks are usually safer, small-cap stocks are often way more exciting. If you own the right small cap, you can make a lot of money as your company becomes the large cap of tomorrow.

This panel of Fool.com contributors has three small-cap COVID-19 stock ideas for intrepid investors. Here's why they like Beyond Air (NASDAQ:XAIR)Ocugen (NASDAQ:OCGN), and Fulgent Genetics (NASDAQ:FLGT) to fly high over the next several years.

A patient receives a shot from a healthcare worker.

Image source: Getty Images.

To infinity and Beyond Air

Patrick Bafuma (Beyond Air): While COVID-19 pills, vaccines, and monoclonal antibodies have gotten the headlines, there is another underappreciated therapy that might be able to help: inhaled nitric oxide (iNO). This is a gas that opens up blood vessels in the lungs, allowing them to more effectively soak up much-needed oxygen. In a subset of COVID-19 patients, iNO may have a mild beneficial impact on ventilator-free days and oxygenation. While in many studies continuous low-dose iNO does not have a mortality benefit, it may be the dose that matters. To this extent, small-cap medical device maker Beyond Air might be able to help.

The company's unique delivery system, LungFit, uses a replaceable cartridge that draws nitric oxide from the environment. This is much easier than current standards of iNO delivery -- via a large 45-pound metal cylinder. The Beyond Air setup needs less space and is easier to move, making LungFit easier logistically for hospital systems. Without the need for the burdensome inventory of heavy, clunky iNO cylinders, the ease of the Beyond Air system alone might help expand the use of this therapy.

In a LungFit COVID-19 pilot study of just 19 patients, 40 minutes of high-dose iNO inhalation four times a day for up to a week seemed beneficial. The iNO group saw shorter hospital stays and less oxygen requirements with no additional safety concerns. Sure, it was a small study, but that's not all this company has to offer. LungFit is actually set to launch in the U.S. this year for persistent pulmonary hypertension of the newborn (PPHN). This condition, where a newborn baby's blood mostly skips over its own lungs, is estimated to generate over $400 million in iNO sales in the U.S. this year. The device maker is also eyeing LungFit for RSV, a type of viral pneumonia for which Beyond Air believes the total addressable market for its equipment is about $1.5 billion. This all adds up to huge potential upside for this device maker with a $360 million market cap.

Can this tiny coronavirus vaccine stock shock Wall Street? 

George Budwell (Ocugen): Ocugen, like nearly all small-cap biotechs, has had an extremely rough November. Specifically, the biotech's shares have fallen by an eye-popping 47.7% so far this month. Besides the industrywide sell-off, Ocugen's stock has been hurt by a number of company-specific events over the past three weeks. Most significantly, new data on its Bharat Biotech-partnered COVID-19 vaccine, Covaxin, suggests that the jab might not be nearly as effective as once believed. What's more, Novavax's slow but steady progress on the regulatory front for its rival coronavirus vaccine candidate could lead to a saturated market in both Canada and the U.S. soon. That's a major risk factor for Ocugen, given that the company only holds co-commercialization rights for Covaxin in North America. 

With the pressure mounting, Ocugen's management decided to apply for the vaccine's Emergency Use Authorization (EUA) from the Food and Drug Administration (FDA) for children ages 2 to 18 earlier this month. This surprise regulatory move is undoubtedly a long shot, to put it mildly. But if Ocugen somehow gets a green light from the FDA for this broad pediatric population, its stock would surely rocket higher. After all, Covaxin, as a more traditional whole-virion, inactivated vaccine, might hold an unusually strong appeal for parents hesitant about cutting-edge vaccines. The biotech thus has an outside chance of booking some truly remarkable sales from Covaxin in 2022 and beyond.

That being said, the odds are heavily against Ocugen actually landing the plane on a pediatric EUA in the United States. Investors, in turn, may want to keep any position in this speculative coronavirus vaccine stock on the small side for the time being.   

This diagnostic stock is a monster in the making  

Taylor Carmichael (Fulgent Genetics): I don't own shares of Fulgent and I'm wondering why not. This diagnostic stock is up an amazing 2,600% over the last three years. And it's still tiny, with a $2.6 billion market cap.

FLGT Chart

FLGT data by YCharts

The numbers are amazing. Fulgent has 55% profit margins, and its revenue jumped 124% in the most recent quarter. And the stock is dirt cheap. Its price-to-sales ratio is two, and its price-to-earnings ratio is four. 

Obviously the company has seen a dramatic boost in its financials because of COVID-19. And the market is imagining that the numbers will fall off a cliff in the future. But so far the growth is still spiking higher. In the third quarter the company reported $228 million in revenue, and 82% of that number was from COVID testing (up 105% from a year ago). But that's not the only arrow in the company's quiver. Fulgent's next-generation sequencing (NGS) diagnostics for cancer skyrocketed 300% in the quarter.  

It's the NGS segment that the company calls its "core" revenue. This was Fulgent's emphasis before the epidemic. In 2019, the core revenue number was $32 million for the year. In 2020, it was up to $36 million. Now the company is pulling down $40 million in core revenue in a single quarter.

I'm not convinced that the COVID diagnostic numbers will fall off a cliff. Because of mutations, COVID is likely to be a continuous threat, much like the flu. So there will always be a need for diagnostics. Regardless, the company's NGS diagnostic is on a monster growth trajectory. Even if the COVID diagnostic market were to disappear (a highly unlikely event, in my opinion), Fulgent would be a strong buy just on the basis of its NGS growth story. I'm confident this small-cap will continue to outperform the market over the next decade.

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.