David slaying Goliath. The Greeks defeating the Persians. Harry Truman's victory over Thomas Dewey.

History is full of stories in which the underdog comes out on top.

But it's not just the stuff of tall tales. In fact, the conclusion of a recent New Yorker article by renowned author Malcolm Gladwell is that these upsets are much more common than we realize.

As with stocks
The characteristics that, according to Gladwell, help an underdog defeat a "stronger" opponent are identical to those that lead certain stocks to outpace others:

Gladwell cites scholar Ivan Arreguin-Toft, who calculates that when underdogs possess these qualities, the probability of their emerging victorious skyrockets from just 28.5% to 63.6%.

In effect, the situation completely reverses and the underdog becomes the odds-on favorite.

These same characteristics also help make winners of small-cap stocks -- which most Wall Street analysts and institutional investors routinely overlook simply because of their small stature.

By way of an example
Let's look at one company that fully embodied those three characteristics when it had its IPO a mere seven years ago:

That last clue probably gave it away, but in case you didn't catch it, the company in question was Netflix .

Although its IPO went for $241 million in 2002, this David is now slaying the Goliath Blockbuster and has a market cap of more than $2.5 billion. And this is just one instance in which the agility that comes with being small helps a tiny company overtake larger competitors.

Size as strength
So companies who embrace their petite size really have a tremendous, yet often ignored, advantage over their competition.

But what's really important for you and me as investors is how much money we could make from an investment. We want stocks that can easily double or triple our money -- or more.

And, again, it's small-cap stocks that have the obvious advantage. Think about what it takes for a business to grow 10 times in value:

Company

Current Market Cap

Market Cap After Tenfold Increase

Future Market Cap Roughly Comparable Today To ...

Intel (Nasdaq: INTC)

$104 billion

$1.0 trillion

Nominal 2008 GDP of Australia

General Electric (NYSE: GE)

$123 billion

$1.2 trillion

Nominal 2008 GDP of India

Apple (Nasdaq: AAPL) Continued...