The best small-cap stocks may not be particularly large right now but have big potential to grow over time. Sometimes these stocks have a niche or specialized business model, and other times they are succeeding in familiar territory. But whatever the focus, small-cap stocks that are recording impressive growth metrics can deliver big-time gains despite their small packages.
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These picks can carry big risks, too, of course. They naturally lack the deep pockets or big brands of mega-cap stocks. Furthermore, some of the best small-cap stocks are focused on narrow areas of Wall Street that leave them more susceptible to volatility.
Although small-cap stocks, technically speaking, are considered those with market values between $300 million and $2 billion, this definition hasn’t been revised for many years. Given the impact that cumulative inflation and trillions of dollars flowing into the markets have had, many companies with valuations far above that level still embody what it once meant to be a small-cap stock. For that reason, this article takes a more liberal stance on what can be considered a small-cap company, revising the upper market cap limit to $7.5 billion.
With that said, if you can stomach a bit more risk, the following 10 stocks are all worth a look thanks to impressive momentum across the end of 2024:
| Small-Cap Stock | Sector | Market Capitalization | Forward Price-to-Earnings Ratio* |
| Hims & Hers Health Inc. (ticker: HIMS) | Consumer defensive | $4.7 billion | 53.2 |
| Iamgold Corp. (IAG) | Materials | $2.9 billion | 5.9 |
| Janux Therapeutics Inc. (JANX) | Health care | $2.6 billion | N/A |
| LandBridge Company LLC (LB) | Energy | $3.8 billion | 28.5 |
| Lumen Technologies Inc. (LUMN) | Communication services | $6.3 billion | N/A |
| Powell Industries Inc. (POWL) | Industrials | $3.3 billion | 22.5 |
| SoundHound AI Inc. (SOUN) | Technology | $1.9 billion | N/A |
| Summit Midstream Corp. (SMC) | Energy | $370 million | 5.4 |
| Sweetgreen Inc. (SG) | Consumer discretionary | $4.2 billion | N/A |
| Zeta Global Holdings Corp. (ZETA) | Technology | $7 billion | 48.8 |
*Forward price-to-earnings ratio as of Oct. 16 close.
Hims & Hers Health Inc. (HIMS)
Market value: $4.7 billion Sector: Consumer defensive
Hims & Hers is a unique small-cap company that operates a telehealth and e-commerce platform, connecting individuals with licensed health care professionals and offering recurring fulfillment on prescription drugs as well as personal care products that include vitamin C, melatonin, skincare and sexual health products. The company saw a staggering 65% surge in revenue in fiscal 2023, and is projecting more than 50% growth this fiscal year. If that’s not enough, there’s also another 34% projected growth for fiscal year 2025. It’s hard to argue with results like that, and shares have surged roughly 150% since Jan. 1 thanks to continually impressive financial results.
Iamgold Corp. (IAG)
Market value: $2.9 billion Sector: Materials
Canada’s Iamgold is a gold producer with proven reserves of roughly 26 million ounces of the precious metal. Gold has outperformed the broader stock market this year, up about 30% since Jan. 1 compared with 22% for the S&P 500 in the same period. IAG stock puts even that profit potential to shame, however, with shares that have roughly doubled in 2024. As a commodity-focused stock, Iamgold is reliant on gold prices and could see a similarly impressive slide if the metal takes a tumble. But considering strong momentum right now and global uncertainty that continues to draw investors to the safe haven of gold, IAG is a small-cap stock worth a look for 2025.
Janux Therapeutics Inc. (JANX)
Market value: $2.6 billion Sector: Health care
There is a lot of risk in development-stage drug companies like Janux Therapeutics. These small-cap stocks tend to be deeply unprofitable with no significant revenue until their treatments win regulatory approval and come to market. As a result, any snags in a drug’s release schedule can mean disaster for shareholders. But JANX has given investors lots of reason to be optimistic, as its leading drug is moving steadily along towards commercialization. It has a prostate cancer drug that is currently enrolling patients for the latest round of clinical trials after very favorable safety and efficacy data back in February. Shares are up about 350% on the year thanks to strong investor interest in the promise of JANX stock and its suite of cancer treatments, which bodes well for continued success for this small-cap stock in 2025.
[READ: 8 Best Stocks to Buy Now With $1,000]
LandBridge Company LLC (LB)
Market value: $3.8 billion Sector: Energy
LandBridge is a unique investment that supports oil and natural gas development across the resource rich Permian Basin and Delaware Basin areas that stretch across Texas and New Mexico. The company focuses mainly on land management, holding a portfolio of oil and gas royalty arrangements, but it also provides water and other materials used in fracking. Its shares soared more than 20% in their NYSE debut back at the end of June, and shares have roughly tripled from their IPO price of $17 a share in just a few short months. There’s not a lot of history here and the company is obviously very sensitive to energy market trends. That said, tremendous momentum and investor enthusiasm for this newly minted small-cap stock could keep LB moving higher in 2025.
Lumen Technologies Inc. (LUMN)
Market value: $6.3 billion Sector: Communication services
Lumen provides various communication products and services to business and residential customers, from fiber optic networks to managed security to cloud data storage. Formerly known as CenturyLink, Lumen has a troubled history that most recently includes cratering to under $1 a share in the last year thanks to its heavy debt loads. But the tables turned for LUMN in a big way back in July, when Microsoft Corp. (MSFT) inked a data center deal that breathed new life into the stock. Now shares are up more than 200% since Jan. 1 and roughly sevenfold from their 52-week lows as investors look ahead to 2025 with renewed optimism for this high-flying small-cap stock.
Powell Industries Inc. (POWL)
Market value: $3.3 billion Sector: Industrials
A manufacturer of custom-engineered electrical equipment and systems, POWL primarily creates gear for electrical houses, circuit breakers, monitoring and control systems, and communications centers. Headquartered in Texas, it has particularly good relationships with oil and gas firms in the region. POWL stock has been riding high thanks to strong results lately, including a staggering 50% jump in revenue projected this fiscal year. What’s more, as of July the company has a tremendous backlog of $1.3 billion in business about to come online. The specialized nature of Powell makes it a small-cap stock that is relatively insulated from competition, and with shares that have tripled so far in 2024, it is clearly making the most of its unique opportunities in the marketplace right now.
SoundHound AI Inc. (SOUN)
Market value: $1.9 billion Sector: Technology
One of several popular AI stocks on Wall Street, SoundHound is voice-enabled software that serves businesses across a host of industries ranging from entertainment to customer service to deliver high-quality “conversational experiences.” The stock has been on an absolute tear lately, up more than 200% in the last year or so thanks to both the AI craze as well as its fundamentals. While not yet profitable, the company is forecast to grow its top line roughly 80% this year and another 84% or so in fiscal 2025 on top of that. Shares are up about 150% since the start of the year, and as the artificial intelligence megatrend looks to continue in the New Year, it may be wise to consider this fast-moving stock before it passes you by.
Summit Midstream Corp. (SMC)
Market value: $370 million Sector: Energy
Summit is an energy infrastructure company with operations ranging from shale fields in North Dakota to Colorado to Texas where it performs gathering, processing and transportation of natural gas and crude oil. This is normally a low-growth but reliable business that fuels a dividend, but SMC hasn’t paid a penny to shareholders since the pandemic-related volatility of 2020. Late last year, SMC embarked on a “strategic review” to assess its structure and consider selling some parts of its business or acquiring new ones to get things back on track. Those plans can sometimes be nothing but empty promises to shareholders, but management followed through in some big ways. First, the company sold its Utica assets to a unit of midstream company MPLX LP (MPLX) for about $625 million. Then, it acquired privately held Tall Oak Midstream for a mix of cash and equity. Wall Street likes what it sees and shares have rallied strongly in anticipation of dividends resuming in the near future.
Sweetgreen Inc. (SG)
Market value: $4.2 billion Sector: Consumer discretionary
Sweetgreen is a healthy dining restaurant chain with a strong following thanks to its fresh and flavorful ingredients in its salads and bowls. The stock has been on a roll lately thanks to strong fundamentals, including more than 15% revenue growth predicted this fiscal year and another 15% next year on top of that. The company is still operating in the red as it invests heavily in growth, but it’s forging ahead quickly with more than 220 locations compared with about 180 at the end of 2022. Consumer tastes can be fickle and growth is not guaranteed, but shares are up more than 200% in the last year as the company continues to open new stores and bring in new customers to its existing locations.
Zeta Global Holdings Corp. (ZETA)
Market value: $7 billion Sector: Technology
There are a lot of fancy AI-related plays out there, but Zeta is a stock that can tie the promise of this emerging technology directly to the bottom line. A data-driven consumer intelligence and marketing automation software firm, Zeta tries to help businesses predict consumer intent — and put the right products in front of them at the right price.
Analysts expect 29% revenue growth this fiscal year after the company raised its guidance earlier in 2024. In fact, August’s second-quarter earnings report was the fourth consecutive report where it boosted expectations, which is a great sign for future growth. Zeta is still bleeding cash as it invests in the future, of course, but those investments seem to be paying off — and with shares up 250% in 2024, those investments have been quite profitable for shareholders, too.
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10 Best Small-Cap Stocks to Buy for 2025 originally appeared on usnews.com
Update 10/17/24: This story was previously published at an earlier date and has been updated with new information.
