Core Insights - Small-cap stocks are regaining attention in 2025 after being overlooked for years, raising questions about their performance relative to larger S&P 500 companies [1] Group 1 - The resurgence of small-cap stocks indicates a shift in market dynamics, suggesting potential investment opportunities [1] - Comparisons are being made between small-cap stocks and their larger counterparts, focusing on growth and valuation metrics [1]

Core Insights - Small-cap stocks are experiencing a rally driven more by optimism than by solid earnings, indicating a potential disconnect between market performance and underlying fundamentals [1][6][14] Performance Comparison - The Russell 2000 index has recently reached its first record closing high in nearly four years, while the S&P 500 has been achieving record finishes since early 2024 [2] - Over the past decade, large-cap stocks have significantly outperformed small-cap stocks, with the S&P 500 gaining 259.7% compared to the Russell 2000's 110.11% since December 31, 2013 [3] - The last time the Russell 2000 outperformed the S&P 500 on a year-to-date basis was February 6, 2023, and it has not outperformed during a calendar year since 2020 [4] Earnings and Profitability - Small-cap stocks are projected to have stronger earnings growth in 2025, with the Russell 2000 expected to deliver 26.5% EPS growth compared to 10.3% for the Russell 1000 [12] - A significant portion of small-cap stocks, approximately 43%, are not reporting positive earnings, with unprofitable stocks in the Russell 2000 up 55% year-to-date compared to 8% for profitable ones [7][8] Market Dynamics - The small-cap rally is largely attributed to speculative investments, particularly in companies with poor profitability records [9][10] - The growth of private capital is impacting the small-cap landscape, as many high-growth companies are choosing to remain private, limiting the pool of public small-cap stocks [15][16] Interest Rate Influence - Small-cap companies tend to benefit more from falling interest rates due to their reliance on floating-rate debt, which can enhance their earnings through lower borrowing costs [13][14] - The current optimism surrounding small caps is primarily driven by expectations of interest rate cuts rather than improvements in business competitiveness [14][15] Private Equity Trends - The trend of private equity firms acquiring small-cap stocks is contributing to a reduction in the number of public companies eligible for small-cap indexes, which may affect the overall growth potential and quality of these companies [16][18] - Recent regulatory changes allowing everyday investors to access private equity could further influence the dynamics of small-cap investments [17]

SPECIAL REPORT: The 50 Most Sustainable Companies — And More — Revealed The rate-hike cycle to battle inflation was brutal for small-cap stocks in 2022. But it didn't get much better for the next two years. Though the Russell 2000 index climbed, its relative strength vs. the S&P 500 left a lot to be desired. But that changed this summer. Small-Cap Stocks Start To Outperform After a number of false starts and trends that didn't last, we still looked at the iShares Russell 2000 ETF (IWM) with interest. Small- ...

With some help from the Federal Reserve's September rate cut, small-cap stocks appear to be finding a groove. Finally. For the 90 days ending October 9, the widely followed Russell 2000 Index returned more than 10%. That's a solid starting point for a corner of the equity market that's long disappointed investors. With that inauspicious track record fresh on investors' minds, sound advice as it relates to small-cap stocks is to remember to be selective. Market participants can efficiently accomplish that ob ...

I could not invest in Amazon.com, Inc. ( AMZN ) 20+ years ago when the company was just getting started. Don't blame me for that, because I only discovered investing in the stock market when I was around 15 years old, certainly not when IDilantha De Silva is an experienced equity analyst and investment researcher with over 10 years in the investment industry. He writes insightful articles for Seeking Alpha, GuruFocus, TipRanks, and ValueWalk, with a significant following on Seeking Alpha. Dilantha’s experti ...

The tickers might not be as exciting as the big tech behemoths dominating headlines, but small-cap stocks in the Russell 2000 (^RUT) index are starting to see real earnings growth after a year of strong performance. Following several months of a rally driven primarily by growing P/E ratios — meaning higher multiples for investors — the Russell 2000's 3% price return through September was entirely driven by upwardly revised earnings expectations, according to research published on Friday by Bank of America ...

Core Insights - The Russell 2000 index has rebounded significantly in Q3 2025, achieving its first all-time high since November 2021, driven by interest-rate-cut expectations and overall optimism in U.S. equities [1] - Nearly 60% of the Russell 2000 index components are trading above their 200-day moving average, indicating potential for further gains [2] - Notable top performers in the Russell 2000 index include Mercurity Fintech Holding, which surged by 538.44% over the past three months, and other companies showing substantial growth [4] Performance Highlights - The top performers in the Russell 2000 for Q3 include: - Mercurity Fintech Holding MFH (+538.44%) - Better Home & Finance Holdings BETR (+353%) - Kodiak Sciences KOD (+338.87%) - Korro Bio KRRO (+283.43%) - Celcuity CELC (+270.04%) - Bloom Energy BE (+253.55%) - American Battery Technology ABAT (+200%) [4] - Year-to-date best performers include: - Oncology Institute TOI (+1,029.45%) - Thredup TDUP (+579.86%) - Better Home & Finance Holdings BETR (+529.37%) - Oklo OKLO (+425.81%) - Palvella Therapeutics PVLA (+422.42%) [4][5]

Core Insights - The article discusses the 11 best penny stocks with the highest upside potential, highlighting a recent rally in small-cap stocks driven by technology and growth companies, particularly in the semiconductor industry [1][2]. Small-Cap Stock Performance - Small-cap stocks have underperformed the market for over a decade but began to outperform in August 2025, with the industrial and financial sectors contributing significantly to gains [2]. - Over the past decade, small caps have only outperformed the market twice, with a notable performance in 2022 where small caps dropped 18.5%, slightly better than the broader market's 19.4% decline [3]. - In the third quarter of 2025, small-cap stocks are up 8%, outperforming large-cap stocks at 7.8% and mid-caps at 3.9%, with the technology sector being the top contributor [4]. Methodology for Stock Selection - The list of the 11 best penny stocks was curated using the Finviz Stock Screener, CNN, and Insider Monkey's Q2 2025 database, focusing on stocks trading below $5 with expected upside of over 25% [6]. - The strategy of imitating top stock picks from hedge funds has shown to outperform the market, with a reported return of 373.4% since May 2014 [6]. Company Highlights - **Tuya Inc. (NYSE:TUYA)**: - Current price is $2.52 with an analyst upside potential of 26.98%. The company reported a 9.35% year-over-year revenue growth to $80.13 million, exceeding Wall Street estimates [8][10]. - Achieved a 15% year-over-year revenue growth in H1 2025, with a non-GAAP operating profit increase of about 127% [9]. - **Clarivate Plc (NYSE:CLVT)**: - Current price is $3.66 with an analyst upside potential of 36.61%. The company is focusing on growing subscription revenue, aiming for 90% of its revenue to come from subscriptions by 2026 [11][12]. - EBITDA margins are expected to shrink to 41% this year due to asset disposals, with plans to streamline its portfolio by reviewing non-core assets by February 2026 [13].

Core Insights - The Russell 2000 index has increased by approximately 2.5% in the five days ending September 19, coinciding with a Federal Reserve interest rate cut, which is seen as a potential start of a deeper rate cut cycle in the next 12 months [1][2] Group 1: Small-Cap Stocks and Interest Rates - Lower interest rates are typically favorable for small-cap stocks, especially those that are unprofitable and rely on debt for operations [2] - Analyst support, business fundamentals, and risk profiles are crucial factors for stock purchases, beyond just rate cuts [3] Group 2: Identiv (INVE) - Identiv has a market cap of over $80 million and specializes in RFID and NFC technologies, with a current stock price of $3.68 and a 12-month price forecast of $5.33, indicating a potential upside of 45.09% [4][6] - Despite a revenue decline from $6.74 million to $5.04 million year-over-year, the stock has gained approximately 18% over the past three months due to a strategic pivot towards higher-margin businesses [5][6] - Analysts maintain a consensus Buy rating for Identiv, with a price target suggesting a 47% increase from current levels [6] Group 3: Immersion (IMMR) - Immersion operates in the haptic technology market, valued at $4 billion to $5 billion, with a projected CAGR of 7-10% over the next five to seven years [8][9] - The company primarily earns revenue through licensing its technology, positioning itself as a leader in the haptic space [9] - Analysts have a bullish outlook on Immersion, with a consensus price target of $12.25, representing a potential gain of 67% from current trading levels [10] Group 4: Emergent BioSolutions (EBS) - Emergent BioSolutions has a market cap of $432 million and focuses on supplying medical countermeasures to the U.S. government, providing stable revenue streams through government contracts [12][13] - The company was awarded contracts totaling over $90 million in September 2025, ensuring stable cash flows amid market volatility [14] - Analysts project a price target of $13.50 for Emergent, indicating a potential upside of 52.77% from its current price of $8.84 [12][16]

Core Insights - The rally in small-cap stocks is not as broad or healthy as it seems, indicating potential underlying issues in the market [1] Group 1 - The performance of small-cap stocks has been driven by a limited number of companies, suggesting a lack of widespread participation in the rally [1] - There are concerns regarding the sustainability of the rally, as many small-cap stocks are not showing strong fundamentals [1] - The disparity in performance between small-cap and large-cap stocks raises questions about market health and investor sentiment [1]