The Russell 2000 Index is up more than 40% in the last 12 months. This is an index that tracks the performance of the 2,000 smallest companies in the Russell 3000 index. Most, but not all, of these companies are small-cap stocks, which means they have a market capitalization between $300 million and $2 billion.
That's significant to investors as the post-election rally continues. Many investors are trying to position themselves for what's next. For much of 2024, that's meant taking a position in small-cap stocks, which historically post the largest gains at the start of bull markets.
However, conflicting economic data has kept many small-cap companies at bay. That's because many of these companies are not profitable and have found it harder to raise capital as interest rates rose.
In this special presentation, we're analyzing seven small-cap stocks positioned for big gains heading into 2025. Investors with capital on the sidelines and a sufficient risk tolerance may want to consider these stocks as they rebalance their portfolios for 2025.
Quick Links
- ACM Research
- Ero Copper
- Lithium Americas
- Canadian Solar
- Applied Digital
- Editas Medicine
- Green Thumb Industries
#1 - ACM Research (NASDAQ:ACMR)
ACM Research Inc. (NASDAQ: ACMR) is a semiconductor-adjacent small-cap stock to watch. The company isn’t a chip foundry. Instead, it provides the cleaning equipment that the chip industry needs. This is a Chinese-based company with its core customer base in China, so it’s not a tariff risk.
Plus, it recently purchased a new facility in Oregon that it expects will be up and running in 2025. This will allow it to gain a footprint in the growing U.S. chip market.
Nevertheless, ACMR stock has tracked along with the ups and downs of the chip industry over the last five years. In fact, as of this writing, the stock is down 4.5% for the year, and it’s nearly 50% below its 52-week high.
On the other hand, the stock is trading at just 20x forward earnings and analysts are forecasting approximately 7.8% earnings growth in the next 12 months. Analysts give the stock a consensus price target of $33—a potential upside of more than 75%.
About ACM Research
ACM Research, Inc, together with its subsidiaries, develops, manufactures, and sells single-wafer wet cleaning equipment for enhancing the manufacturing process and yield for integrated chips worldwide. It offers space alternated phase shift technology for flat and patterned wafer surfaces, which employs alternating phases of megasonic waves to deliver megasonic energy in a uniform manner on a microscopic level; timely energized bubble oscillation technology for patterned wafer surfaces at advanced process nodes, which provides cleaning for 2D and 3D patterned wafers; Tahoe technology for delivering cleaning performance using less sulfuric acid and hydrogen peroxide; and electro-chemical plating technology for advanced metal plating.
Read More - Current Price
- $18.73
- Consensus Rating
- Buy
- Ratings Breakdown
- 4 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $33.00 (76.2% Upside)
#2 - Ero Copper (NYSE:ERO)
Commodity stocks are part of the Trump trade that has been happening since the U.S. presidential election. The anticipated growth of data centers is a key reason to believe that we are about to enter a super cycle in copper. That hasn’t shown up in the price of copper this year, but analysts expect that to change. The spot price of copper may lead the way, but mining stocks won’t be far behind.
In that case, Ero Copper Corp. (NYSE: ERO) is a small-cap name to watch. Ero Copper’s core high-margin operations are in Brazil, where it expects to double copper production in 2025. The company also does this in a sustainable way.
Ero Copper has a solid balance sheet, with $125 million of cash or cash equivalents on its books as of the third quarter 2024. Analysts are forecasting earnings growth of 227% in the next 12 months and give ERO stock a $30 price target, which offers a 91% upside for investors.
About Ero Copper
Ero Copper Corp. engages in the exploration, development, and production of mining projects in Brazil. The company is involved in the production and sale of copper concentrate from the Caraíba operations located in the Curaçá Valley, northeastern Bahia state, Brazil, as well as gold and silver by-products.
Read More - Current Price
- $15.43
- Consensus Rating
- Buy
- Ratings Breakdown
- 7 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $30.00 (94.4% Upside)
#3 - Lithium Americas (NYSE:LAC)
Lithium Americas Corp. (NYSE: LAC) is another commodity stock to watch in 2025 and beyond. As you know, lithium is a core component of lithium-ion batteries that are the current industry standard for electric vehicles (EVs) and are also used in other electric devices such as smartphones and energy storage systems. Lithium America is a leader in the sector. The company’s primary assets are the Cauchari-Olaroz project in Argentina and the Thacker Pass project in Nevada.
While the incoming Trump administration is expected to eliminate EV mandates, the amount of investment in this sector is too great to ignore. The United States may not be at an inflection point yet, but it seems inevitable. That will mean that lithium, like copper, is likely to enter an area where supply will have to ramp up.
Lithium America isn’t profitable yet and analysts aren’t expecting that to happen in the next year. Still, analysts have a consensus price target of $5.63, which would be a 33% increase from its closing price on November 13.
About Lithium Americas
Lithium Americas Corp. engages in the exploration and development of lithium properties in the United States and Canada. It holds a 100% interest in the Thacker Pass project located in northern Nevada, as well as investments in exploration properties in the United States and Canada. Lithium Americas Corp.
Read More - Current Price
- $3.87
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $5.63 (45.3% Upside)
#4 - Canadian Solar (NASDAQ:CSIQ)
Like metal and mining stocks, Canadian Solar Inc. (NASDAQ: CSIQ) may be more of a cyclical play, but it’s one to keep an eye on. The company has a large pipeline of solar and battery energy storage positions.
Renewable energy stocks are supposed to fall out of favor in the Trump administration. But this may not be true for all sectors. For example, although there’s talk of clawing back some of the unspent funds in the Inflation Reduction Act, industry analysts believe the tax credits for solar systems are likely to stay in place.
Canadian Solar does have heavy exposure to China, which is something for investors to watch as the stock also has short interest of over 20%. However, the company has positive cash flow, and analysts expect earnings growth of over 1,000%. That tracks with a consensus price target of $22.03, which is more than an 84% upside in the next 12 months.
About Canadian Solar
Canadian Solar Inc, together with its subsidiaries, provides solar energy and battery energy storage products and solutions in in Asia, the Americas, Europe, and internationally. The company operates through two segments, CSI Solar and Recurrent Energy. The CSI Solar segment designs, develops, and manufactures solar ingots, wafers, cells, modules, and other solar power and battery storage products.
Read More - Current Price
- $11.77
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 3 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $22.03 (87.2% Upside)
#5 - Applied Digital (OTCMKTS:APLD)
Applied Digital Corp. (OTCMKTS: APLD) is a direct way to invest in the growth of data centers. The company changed its name from Applied Blockchain to Applied Digital to reflect its pivot into the data center space.
Data centers became important with the rise of cloud computing. The demand for data storage created by generative AI is driving exponential growth in the sector. In fact, IndustryARC predicts that the data center market size will reach $418 billion by 2030. If those growth estimates are correct, that would be a compound annual growth rate (CAGR) of 9.6%.
Applied Digital’s topline shows strong year-over-year growth that could get a boost from hyperscalers. However, investors should exercise a little caution because the company is not profitable. APLD stock is up 12% in 2024 but is up approximately 118% in the last six months.
About Applied Digital
Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services.
Read More - Current Price
- $6.86
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - Editas Medicine (NASDAQ:EDIT)
A significant number of small-cap stocks are found in the biotechnology sector. That brings us to Editas Medicine Inc. (NASDAQ: EDIT), a clinical-stage company in the intriguing field of gene editing. The company’s lead therapy, EDIT-301, uses CRISPR technology to treat genetic disorders. It's currently in clinical trials for sickle cell disease and beta-thalassemia.
On the homepage of the company’s website is the question: “What if we could repair broken genes?” If you’re a long-term investor and you knew a company was going to have a therapy to do just that, you would buy it hand over fist. Imagine the ability to treat genetic-based diseases by editing a patient’s gene sequence.
But the other side of that coin is that there are no guarantees that the therapy will get approved. And even if it does, there are regulatory hurdles to climb with insurance companies.
You’ll want to follow the analysts on this one, and they are bullish on EDIT stock with a price target of $9.08—more than 200% above the price as of November 13.
About Editas Medicine
Editas Medicine, Inc, a clinical stage genome editing company, focuses on developing transformative genomic medicines to treat a range of serious diseases. It develops a proprietary gene editing platform based on CRISPR technology. The company develops EDIT-101, which is in Phase 1/2 BRILLIANCE trial for Leber Congenital Amaurosis; and reni-cel, a clinical development gene-edited medicine to treat sickle cell disease and transfusion-dependent beta-thalassemia.
Read More - Current Price
- $2.77
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $9.08 (227.9% Upside)
#7 - Green Thumb Industries (OTCMKTS:GTBIF)
If you’re looking for a potential blockbuster small-cap that’s still in the “green shoot” stage, you may want to look at Green Thumb Industries Inc. (OTCMKTS: GTBIF). This is a cannabis play, which brings some risk. The sector has fallen out of favor with investors and GTBIF stock is down 20.7% in 2024.
That said, the stock is up about 0.3% since the U.S. presidential election. That’s not much, but the growth is based on the idea that the Trump administration may be more agreeable to the legalization of cannabis.
If that occurs, a company like Green Thumb—which is already generating revenue—would be a stock to watch. The company is profitable, and earnings and revenue are growing, albeit not as fast as some investors would like. However, analysts have a $16.50 price target on GTBIF stock, which may make it worth a look for risk-tolerant investors.
About Green Thumb Industries
Green Thumb Industries Inc manufactures, distributes, markets, and sells of cannabis products for medical and adult-use in the United States. It operates through two segments, Retail and Consumer Packaged Goods. The company offers cannabis flower; processed and packaged products, including pre-rolls, concentrates, vapes, capsules, tinctures, edibles, topicals, and other cannabis-related products under the &Shine, Beboe, Dogwalkers, Doctor Solomon's, Good Green, incredibles, and RHYTHM brands.
Read More - Current Price
- $9.29
- Consensus Rating
- Strong Buy
- Ratings Breakdown
- 6 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $16.50 (77.6% Upside)
The small-cap stocks on this list are just a sampling of the stocks available to investors. You can find small-cap stocks in every sector. If you're not familiar with these names, take heart. Companies like Apple and Amazon were not household names when they were small-cap stocks. But if you had the foresight to invest in those companies in their infancy and held on to your gains, you've generated a significant gain.
If you're not sure about these names, MarketBeat makes it easy for you to begin your due diligence with our list of Top-Rated Small-Cap stocks. These are small-cap stocks with the highest average rating among equities research analysts in the last 12 months.
And you can filter our free Stock Screener tool to look for small-cap stocks that meet other fundamental and technical criteria that are important to you. For example, we used the Stock Screener to look for stocks that analysts believe could increase earnings by more than 10% in the next 12 months.
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