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.
9. Redwire Corporation (NYSE:RDW)
Sector/Industry: Industrial (Aerospace & Defense)
Share Price: $8.52
Potential Upside: 39.4%
Number of Hedge Fund Holders: 15
Redwire Corporation (NYSE:RDW) is one of the most promising small-cap industrial stocks under $50.
As of December 22, the consensus ratings indicate a bullish stance towards Redwire Corporation (NYSE:RDW). The company is covered by nine analysts, six of whom assigned Buy ratings, two assigned Hold ratings, and there was just 1 Sell rating. The resulting consensus 1-year average price target for the stock is $11.88, which offers a lucrative 39.4% upside from the current level.
On December 11, Canaccord Genuity analyst Austin Moeller reiterated his bullish stance on Redwire Corporation (NYSE:RDW). The analyst assigned a Buy rating to the stock with a $11 target price. This estimate offers nearly 36.5% upside to investors from the current level.
Moeller shed light on the company’s transition from being a commercial space company to a defense technology business, which will ensure sustainable revenue streams over the long run. He pointed out the company’s inclination towards non-commoditized products such as heavy spacecraft and weapon systems, which would enable strong market positioning for the business.
Another factor leading to Moeller’s bullish stance on Redwire Corporation (NYSE:RDW) is the company’s innovations, including Stalker UAS and the Roll-Out Solar Array (ROSA) technologies. These technologies have military and space infrastructure applications, which not only give a competitive edge to the company but also would be a major growth driver in the future.
Redwire Corporation (NYSE:RDW) is an aerospace and defense tech company that provides mission-critical space infrastructure solutions. The company caters to government and commercial entities, and utilizes digital engineering and AI to develop autonomous aerospace infrastructure systems. Some of their offerings include camera systems, navigation payloads, sensors, and avionics.
8. Evolv Technologies Holdings Inc. (NASDAQ:EVLV)
Sector/Industry: Industrial (Security & Protection Services)
Share Price: $7.05
Potential Upside: 39.4%
Number of Hedge Fund Holders: 45
Evolv Technologies Holdings Inc. (NASDAQ:EVLV) is one of the most promising small-cap industrial stocks under $50.
On December 22, Northland Securities analyst Michael Latimore reaffirmed his bullish view on Evolv Technologies Holdings Inc. (NASDAQ:EVLV). He assigned a Buy rating to the stock with a price target of $9.5, which offers nearly 38% upside potential to investors.
The consensus sentiment towards Evolv Technologies Holdings Inc. (NASDAQ:EVLV) is also positive. As of the December 22 closing, the stock has received Buy ratings from all four analysts covering it. Such bullish consensus has resulted in an estimated 1-year average price target of $9.83. This implies a 39.4% upside from the current level.
On December 16, the company announced a major development regarding its Evolv Express product. The product has been deployed at Pechanga Arena, which is a 14,000-seater multi-purpose sports and entertainment venue in San Diego. This is another addition to Evolv Technologies Holdings’ (NASDAQ:EVLV) expanding footprint across key venues in the state.
Evolv Technologies Holdings Inc. (NASDAQ:EVLV) is a security technology company that offers AI-enabled end-to-end security solutions. With human security at its core, the company delivers AI-driven security screening and analytics covering public venues, hospitals, and schools.
7. Hillman Solutions Corp. (NASDAQ:HLMN)
Sector/Industry: Industrial (Tools & Accessories)
Share Price: $9.11
Potential Upside: 43.3%
Number of Hedge Fund Holders: 24
Hillman Solutions Corp. (NASDAQ:HLMN) is one of the most promising small-cap industrial stocks under $50.
On December 10, Brian McNamara from Canaccord Genuity reiterated his bullish stance on Hillman Solutions Corp. (NASDAQ:HLMN). He assigned a Buy rating to the stock with a price target of $15. This implies a highly attractive 67% upside potential for investors at the current level.
McNamara has attributed his views to management’s optimistic outlook for 2026, which is characterized by healthy growth prospects. Such an outlook is in line with rising sales for major retailers such as Home Depot, Ace Hardware, Lowe’s, and Tractor Supply. Resilient performance by these retailers, which account for a significant share of revenue for Hillman Solutions Corp. (NASDAQ:HLMN), bodes well for the stock. The Analyst categorically noted Home Depot’s resilient performance in the hardware space, despite certain headwinds in the home improvement segment.
As of the December 22 closing, consensus estimates reflect positive analyst sentiment for Hillman Solutions Corp. (NASDAQ:HLMN), after the stock dropped 8% this year. Of the 4 analyst ratings assigned to the stock, 3 were Buy and 1 was Hold. Analysts forecast a 1-year average price target of $13.05, leading to an estimated upside of more than 43% from the current level.
Hillman Solutions Corp. (NASDAQ:HLMN) is involved in consumer fabrication, distribution, hardware products, and other relevant merchandising services. With a strong distribution network and a service team comprising 1,200 dedicated professionals, the company offers a well-rounded product portfolio that includes digital solutions, hardware equipment, and protective gear.
6. Titan Machinery Inc. (NASDAQ:TITN)
Sector/Industry: Industrial (Industrial Distribution)
Share Price: $15.76
Potential Upside: 45.9%
Number of Hedge Fund Holders: 18
Titan Machinery Inc. (NASDAQ:TITN) is one of the most promising small-cap industrial stocks under $50.
As of December 22, broader analyst coverage indicates an optimistic view of Titan Machinery Inc. (NASDAQ:TITN), with an estimated 1-year average price target of $23, implying almost 46% upside. The stock is covered by three analysts, two of whom have issued Buy calls and one has issued a Hold call.
From the cautious side, Mircea Dobre from Robert W. Baird assigned a Hold rating to Titan Machinery Inc. (NASDAQ:TITN) on December 1. Dobre has recommended that investors take a more cautious approach after the stock rallied 31% in 2025, and has also forecasted structural headwinds for both U.S. and European operations in 2026. Despite the challenges lying ahead, the analyst has given a price target of $21, which still offers a 35% upside to investors.
So far during 2025, Titan Machinery Inc. (NASDAQ:TITN) has made significant efforts in curtailing its inventory levels, reducing it by $98 million during the first nine months. Such operational efficiency surpassed the initial forecasts, where the company had planned a reduction of $100 million for the entire year. However, the first nine months’ results led to a target revision to $150 million. Such efficient inventory management, in addition to an improved sales mix, led to a massive jump in equipment margins from 3.1% during the first half to 8.1% during the third quarter. Strong performance across the European segment is another factor behind bullish market consensus.
Titan Machinery Inc. (NASDAQ:TITN) operates an extensive network of more than 100 dealerships for farming and construction equipment. With presence across the United States, Europe, and Australia, the company also partners with the world’s leading specialty equipment and technology companies to deliver unrivalled support to customers.
5. Ehang Holdings Ltd. (NASDAQ:EH)
Sector/Industry: Industrial (Aerospace & Defense)
Share Price: $13.69
Potential Upside: 53.4%
Number of Hedge Fund Holders: 8
Ehang Holdings Ltd. (NASDAQ:EH) is one of the most promising small-cap industrial stocks under $50.
On December 2, DBS analyst Jason Sum reaffirmed his bullish view on Ehang Holdings Ltd. (NASDAQ:EH). He assigned a Buy rating to the stock and has estimated a target price of $24. Sum’s forecasts lead to an almost 80% upside for the stock from the current level.
The consensus 1-year median price target for Ehang Holdings Ltd. (NASDAQ:EH) is $21, resulting in an upside of above 53%. These forecasts stem from 3 analyst ratings assigned to the stock as of December 22 closing. 2 analysts gave Buy calls, and 1 was a Hold call.
In its third-quarter earnings call, the management highlighted the successful completion of more than 80,000 flights around the world. They also emphasized their plans to expand operations across Southeast Asia and the Gulf. On the product development front, the company is taking strides with a strong order backlog for its well-diversified product mix that includes drone light shows, firefighting variants, and logistics aircraft.
During the earnings call, management also mentioned that capital reserves for the company currently exceed RMB 1.13 billion. This gives Ehang Holdings Ltd. (NASDAQ:EH) adequate financial strength to make R&D and other commercial investments in the future.
Ehang Holdings Ltd. (NASDAQ:EH) offers an autonomous aerial vehicle (AAV) technology platform to ensure accessible, secure, and eco-friendly air mobility for everyone. Apart from an extensive product portfolio comprising EH216 series, VT series, Falcon B, and GD series, their service offerings also include passenger transportation, logistics, and aerial media solutions.
4. PureCycle Technologies (NASDAQ:PCT)
Sector/Industry: Industrial (Pollution & Treatment Controls)
Share Price: $9.22
Potential Upside: 73.5%
Number of Hedge Fund Holders: 29
PureCycle Technologies (NASDAQ:PCT) is one of the most promising small-cap industrial stocks under $50.
On December 19, Craig-Hallum analyst Eric Stine gave a Hold rating to PureCycle Technologies (NASDAQ:PCT). Despite Stine’s neutral stance on the company, the overall consensus as of December 22 remains positive. As per analyst estimates, the stock has a target price of $16, which gives around 73.5% upside potential from the current level. PureCycle Technologies (NASDAQ:PCT) is covered by 7 analysts, 4 of whom have assigned Buy ratings and 3 Hold ratings.
On December 11, management announced initial sales of its PureFive resins to one of the top 5 global paint and coatings companies for cap production. The sales occurred after the product underwent stringent testing protocols set by the customer. After passing these protocols, spray paint cans along with the above-mentioned caps are now available on store shelves.
PureCycle Technologies (NASDAQ:PCT) CEO Dustin Olson added:
“The caps and closures market represents a great opportunity for our company. Polypropylene is predominantly used in North America for caps and closures, with more than 300 million pieces produced annually. This supply partnership with one of the leading paint and coating companies in the world demonstrates that manufacturers can achieve their sustainability goals and meet product performance requirements when they use our PureFive resin.”
PureCycle Technologies (NASDAQ:PCT) uses its patented solvent-based purification technology to recycle waste polypropylene into recycled resin. This technology allows them to separate color, odor, and other contaminants from plastic waste, making it a renewable source for companies.
3. Serve Robotics Inc. (NASDAQ:SERV)
Sector/Industry: Industrial (Specialty Industrial Machinery)
Share Price: $11.02
Potential Upside: 81.5%
Number of Hedge Fund Holders: 10
Serve Robotics Inc. (NASDAQ:SERV) is one of the most promising small-cap industrial stocks under $50.
At the close of play on December 22, the consensus ratings project a bullish market view for Serve Robotics Inc. (NASDAQ:SERV). The stock has been covered by 5 analysts, all of whom have assigned Buy ratings. According to analyst estimates, the median 1-year price target for the stock is $20, implying a potential upside of 81.5% from the current level.
On December 18, Oppenheimer analyst Colin Rusch initiated his coverage of Serve Robotics Inc. (NASDAQ:SERV). The analyst has a bullish view of the stock, in line with market consensus, and has assigned a Buy rating. Rusch has estimated a price target of $20, which offers more than 86% upside potential to investors.
Rusch has called Serve Robotics Inc. (NASDAQ:SERV) “a Physical AI pioneer”, which is capitalizing on their strong data leadership. The analyst credited the company’s innovative solutions to the amalgamation of their software efficiency and robust hardware design. This gives them a competitive edge, especially within complex environments, as they are able to leverage such capabilities for accelerated learning. According to Rusch, the company also has distinct structural cost advantages over its peers, which adds up to his bullish stance.
Serve Robotics Inc. (NASDAQ:SERV) is a maker of AI-powered low-emission robotic carriers that help in sidewalk food delivery in public places. Their self-driving delivery robots make the delivery process highly economical and efficient for consumer convenience.
2. Vertical Aerospace Ltd. (NYSE:EVTL)
Sector/Industry: Industrial (Aerospace & Defense)
Share Price: $5.70
Potential Upside: 116.3%
Number of Hedge Fund Holders: 17
Vertical Aerospace Ltd. (NYSE:EVTL) is one of the most promising small-cap industrial stocks under $50.
As of December 22, Vertical Aerospace Ltd. (NYSE: EVTL) has received coverage from 4 analysts, with 100% of ratings Buy. Consensus estimates have set a target price of $12.33, implying 116% upside for investors. This comes after the stock had taken a dip of almost 57% during 2025.
On December 15, Needham analyst Chris Pierce reiterated his bullish view on Vertical Aerospace Ltd. (NYSE:EVTL) stock. The analyst assigned a Buy rating and also raised his target price from $9 to $11. As per Pierce’s view, the stock currently offers a massive 103% upside at the prevailing rate.
On December 10, Vertical Aerospace Ltd. (NYSE:EVTL) unveiled a zero-emission electric vertical takeoff and landing (eVTOL) aircraft, Valo. This succeeds the company’s VX4 prototype and is designed to ensure the highest safety protocols. Such robust design comes through rigorous testing and extensive customer feedback, with planned certification in 2028.
This move also marks the United Kingdom’s return to aircraft manufacturing and is expected to have significant economic implications for the country. As per initial estimates, it will contribute around £3 billion annually to the economy, along with more than 2,000 high-skilled jobs.
Vertical Aerospace Ltd. (NYSE:EVTL) is an aerospace technology company that designs and manufactures zero-emission electric vertical takeoff and landing (eVTOL) aircraft. Through its flagship VX4 aircraft, the company is on a mission to advance air mobility and make urban travel more sustainable.
1. Enovix Corp (NASDAQ:ENVX)
Sector/Industry: Industrial (Electrical Equipment & Parts)
Share Price: $8.34
Potential Upside: 127.8%
Number of Hedge Fund Holders: 32
Enovix Corp (NASDAQ:ENVX) is one of the most promising small-cap industrial stocks under $50.
On December 11, George Gianarikas of Canaccord Genuity reiterated his bullish stance on Enovix Corp. (NASDAQ:ENVX). The analyst rated the stock as Buy with a target price of $21. In line with Gianarikas’s estimates, the stock has an astounding upside potential of 152%, after declining 24% during 2025.
Gianarikas has based his view on the management’s strategic identification of the smartphone battery market as the largest addressable market for the business. Not only does it offer high volumes, but it also eases the company’s access into new segments such as AR/VR headsets and audio devices. On that front, the analyst also mentioned the company’s ongoing partnership with smartphone manufacturer Honor, which is based on Enovix’s high-energy-density silicon-anode AI-1 battery.
According to Gianarikas, upside potential for the stock stems from various other factors, such as their inorganic growth strategy, diversification of revenue mix, and their plans to establish a manufacturing hub in South Korea.
Besides that, Enovix Corp (NASDAQ:ENVX) stock has received coverage from 9 analysts as of December 22. 7 analysts have given a Buy rating, and 2 have given Hold calls to the stock. According to consensus estimates, the median 1-year price target for the stock is $19, implying almost 128% upside at the current market price.
Enovix Corp (NASDAQ:ENVX) designs and manufactures lithium-ion battery cells that have applications across mobiles, IoT, electric vehicles, and computing devices. These batteries are highly efficient with supreme thermal performance, and an architecture that allows for 100% active silicon anode for high energy density.
While we acknowledge the potential of ENVX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ENVX and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: Goldman Sachs Value Stocks: 10 Stocks to Buy and 14 Best Precious Metals Stocks to Buy Now.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
