Rising global defense spending, large-scale infrastructure investments, increased manufacturing activity, and AI-driven demand for data centers are among the trends that drove the industrial sector in 2025. The catch for investors is that these trends are likely to persist for several years, as much of the underlying spending is tied to multi-year projects. That said, there are potential headwinds that could counter these developments, including strategic realignments, disruptive technologies, and shifts in the economic cycle. Keeping these structural challenges in mind, investors can still seek opportunities across a diverse range of underlying sub-verticals.
An interesting aspect of the industrial sector is the variety of industries that fall within this broader categorization. This covers different functions of the economy and enables investors to achieve adequate portfolio diversification. Even by market capitalization, the sector includes a wide range of companies across the size spectrum.
Small-cap industrial stocks can be an attractive avenue for investors seeking hidden gems with significant growth potential. The space is often overlooked by investors, which naturally creates inefficiencies and undervaluation of the underlying stocks. For reference, we look at the 15% returns in 2025 for the Invesco S&P SmallCap Industrials ETF, which tracks the S&P SmallCap 600 Industrials index. Although these mid-teen returns appear impressive at first glance, one can anticipate further upside given the sector’s projected growth prospects. Here, we try to identify some of those hidden gems that offer promising upside in the foreseeable future.
With that background, let’s explore our 11 most promising small-cap industrial stocks under $50.
Our Methodology
To identify the most promising small-cap industrial stocks for this article, we began by screening U.S.-listed companies in the broader industrial sector with market capitalizations between $300 million and $2 billion and trading below $50. Next, we shortlisted stocks with at least 20% upside potential according to TipRanks consensus, selected the top 11, and ranked them in ascending order by their upside forecasts.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11. Electrovaya Inc. (NASDAQ:ELVA)
Sector/Industry: Industrial (Electrical Equipment & Parts)
Share Price: $7.50
Potential Upside: 32.0%
Number of Hedge Fund Holders: 6
Electrovaya Inc. (NASDAQ:ELVA) is one of the most promising small-cap industrial stocks under $50.
On December 18, Oppenheimer analyst Colin Rusch initiated coverage of Electrovaya Inc. (NASDAQ:ELVA). The analyst assigned a bullish rating to the stock with a price target of $14, which gives an upside of almost 87% from the current level.
Rusch based his outperform rating on the market position of Electrovaya Inc. (NASDAQ:ELVA). As a leading platform for battery technologies and systems, he highlighted the company’s intellectual property in design, manufacturing, and handling, centered on its proprietary Infinity Battery Platform. Not only does it create a powerful moat, but it also offers a solid foundation to the business for becoming a critical supplier of long-life lithium-ion battery systems for autonomous mobile robots. Rusch believes the company is in a strong position to scale its presence within an expanding electric materials handling space. These factors make him hold a highly optimistic view of the stock.
As of the December 22 closing, consensus ratings remain favorable toward Electrovaya Inc. (NASDAQ:ELVA). All 5 analysts covering the company assigned Buy ratings, resulting in a consensus 1-year average price target of $9.90. This results in an upside potential of 32% from the current level.
Electrovaya Inc. (NASDAQ:ELVA) is a manufacturer of lithium-ion batteries and battery management systems. Their offerings focus on preventing climate change and have various applications, including electric transportation, energy storage, warehousing, and heavy-duty electric vehicles. They leverage solid-state battery technology covering both low and high voltage systems.
10. Bowman Consulting Group Ltd. (NASDAQ:BWMN)
Sector/Industry: Industrial (Engineering & Construction)
Share Price: $33.88
Potential Upside: 35.0%
Number of Hedge Fund Holders: 14
Bowman Consulting Group Ltd. (NASDAQ:BWMN) is one of the most promising small-cap industrial stocks under $50.
On December 9, Roth Capital analyst Jeff Martin reaffirmed his bullish stance on Bowman Consulting Group Ltd. (NASDAQ:BWMN). The analyst rated the stock as Buy and raised the price target from $45 to $50. As per Martin’s forecasts, the stock offers a highly impressive upside potential of over 45% to investors.
Martin attributed his upward revision of the target price to Bowman Consulting Group’s (NASDAQ:BWMN) recent acquisition of RPT Alliance. The strategic move is aimed at broadening their power and utilities platform. According to the analyst, this acquisition will enable growth opportunities while expanding the group’s margins. He highlighted the company’s spiked valuation relative to its peers and considers it to be a “justifiable premium” given the company’s growth profile.
The stock has a consensus 1-year average price target of $45.75, which implies an upside potential of 35% from the current level. As of December 22 closing, the forecasts remain strong for Bowman Consulting Group Ltd. (NASDAQ:BWMN). The stock has been covered by four analysts, all of whom have given Buy calls.
Bowman Consulting Group Ltd. (NASDAQ:BWMN) is a multi-disciplinary engineering services firm that offers innovative solutions across real estate, infrastructure, and energy. Some of the major functions include land planning/zoning, construction administration, environmental management solutions, roadway & drainage designs, and utility relocation designs.
