Robert Teeter of Silvercrest Asset Management recently appeared in an interview to express that he thinks small-cap stocks are currently facing a choppy market, but he also acknowledged that he anticipates a rally later in the year. Based on this sentiment, he advised clients on the importance of diversification within the S&P 500 and pointed to opportunities in international markets. We covered his stance in greater detail in one of our other articles, 10 Best Small-Cap Value Stocks to Buy Now. Here’s an excerpt from it:

“He noted that the Trump trade initially boosted small caps due to expectations of economic acceleration and lower interest rates, both of which are favorable for these companies. However, policy uncertainty and weaker-than-expected economic data have delayed their rally. Teeter believes that small caps will come into their own later in the year, but for now, they are facing a choppy market with significant rotation.”

However, later on March 26, Villere & Co. Portfolio Manager George Young joined ‘Market Domination Overtime’ on Yahoo Finance to discuss why investors should be looking at small-cap stocks. George Young stated that small caps currently appear cheap and have been underperforming relative to larger stocks. He highlighted that small-cap stocks have been inexpensive for a while. To support his stance, he pointed out that last year, the S&P 500 rose about 25%, while small-cap stocks increased by only 11%. He explained that this disparity suggests a regression to the mean at some point, which means that the valuation gap between small caps and large caps should eventually narrow. Young also noted a shift in market dynamics during Q1 of this year. While the S&P 500 was down ~2% then, the S&P 500 excluding the MAG7 stocks was actually up ~2%. He described this change as a relatively usual once, since stock market leadership often rotates between sectors and types of stocks. Young particularly favored the small-cap sector when questioned about long-term and steady investments.

That being said, we’re here with a list of the 11 most promising small-cap stocks according to analysts.

Our Methodology

We sifted through the Finviz stock screener to compile a list of the top small-cap stocks that were trading between $300 million and $2 billion, and that had the highest upside potential (at least 40%). The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

11 Most Promising Small-Cap Stocks According to Analysts

11. Tripadvisor Inc. (NASDAQ:TRIP)

Market Capitalization as of April 23: $1.74 billion

Number of Hedge Fund Holders: 40

Average Upside Potential as of April 23: 45.63%

TripAdvisor Inc. (NASDAQ:TRIP) is an online travel company that offers travel guidance products and services. It operates through three segments: Brand TripAdvisor, Viator, and TheFork. The Viator segment operates an online marketplace that connects travelers to discover and book tours, activities, and attractions from experience operators.

Viator’s Gross Booking Value (GBV) reached ~$4.2 billion in 2024. Viator achieved revenue growth of 14% for the full year, which accelerated to 16% in Q4 to make $186 million. Notably, direct booking volume on the Viator platform grew by ~30% for the full year, which was supported by marketing efficiency and investments in the consumer-facing product for boosting conversion and customer loyalty.

Viator’s mobile app also emerged as its fastest-growing channel, with booking volume surging by over 80% for 2024. Viator expanded its network and added more than 15% to the number of operators on its platform in this period. TripAdvisor Inc.’s (NASDAQ:TRIP) focus for Viator in 2025 centers on enhancing conversion and loyalty. For Q1 2025, Viator projects booking volume growth of 14% to 16% and revenue growth of 9% to 11%.

10. Madison Square Garden Entertainment Corp. (NYSE:MSGE)

Market Capitalization as of April 23: $1.49 billion

Number of Hedge Fund Holders: 46

Average Upside Potential as of April 23: 46.02%

Madison Square Garden Entertainment Corp. (NYSE:MSGE) engages in the live entertainment business. It produces, presents, and hosts live entertainment events, such as concerts, sporting events, family shows, family shows, performing arts events, and special events. It also operates a collection of venues, such as Madison Square Garden and The Theater at Madison Square Garden.

The Christmas Spectacular segment is a record-revenue-generating holiday show that boosted Madison Square’s FQ2 2025 performance through high ticket sales and per-guest spending. In its 91st season, the show achieved record-setting results across numerous metrics and made over $170 million in total revenue, which was a new high for the production. This was fueled by the sale of ~1.1 million tickets across 200 performances, which marked the show’s strongest sell-through rate in 25 years.

The show also experienced year-over-year growth in average ticket yields for both individual and group sales due to strategic pricing. Guggenheim analysts reaffirmed their Buy rating on Madison Square Garden Entertainment Corp. (NYSE:MSGE) with a $48 price target. Despite recent headwinds on the stock’s performance, the analysts believe that Madison Square will still generate ~double-digit growth in adjusted operating income (AOI) for 2025.

Ariel Fund stated the following regarding Madison Square Garden Entertainment Corp. (NYSE:MSGE) in its first quarter 2024 investor letter, highlighting the company’s strong earnings beat:

“Additionally, Madison Square Garden Entertainment Corp. (NYSE:MSGE), shares advanced in the quarter following a robust earnings beat, driven by an increase in the number of concerts held at MSGE’s venues, strong demand for the Christmas Spectacular and higher per-event revenues. Notably, management raised full year 2024 guidance and reiterated its outlook to achieve a low-double-digit percentage increase in event bookings. With marquee assets such as New York’s Madison Square Garden, Radio City Music Hall, Beacon Theatre and The Chicago Theater, we believe MSGE is well positioned to capitalize on strong demand for live entertainment. In our view, MSGE’s assets generate stable cash flow that should enable deleveraging. At current levels, the company is trading at a significant discount to our estimate of private market value.”

9. Rapid7 Inc. (NASDAQ:RPD)

Market Capitalization as of April 23: $1.51 billion

Number of Hedge Fund Holders: 45

Average Upside Potential as of April 23: 48.68%

Rapid7 Inc. (NASDAQ:RPD) provides cybersecurity software and services under the Rapid7, Nexpose, and Metasploit brand names. It offers Rapid7 Insight Agent, Rapid7 Insight Network Sensor, Rapid7 Cloud Event Data Harvesting, and third-party integrations and ecosystem, as well as orchestration and automation solutions.

On February 13, DA Davidson lowered the price target on Rapid7 to $35 from $39, while keeping a Neutral rating. This followed the company’s recent quarterly financial reports. Rapid7 made $844 million in revenue for the full year 2024, which was a 9% increase year-over-year. This was driven by $809 million in product subscription revenue. Rapid7’s Detection and Response (D&R) business achieved double-digit growth and ended the year with over $400 million in ARR.

Within the D&R segment, Managed D&R accounts for over 75% of the total D&R ARR and is growing at a mid-teens rate. For 2025, Rapid7 Inc. (NASDAQ:RPD) anticipates the overall ARR growth to be between 4% and 6%, which will result in an expected ending ARR of $870 to $890 million. The company’s AI-driven MDR offering is a key differentiator and contributes to its leadership position in the market.

8. The Chemours Company (NYSE:CC)

Market Capitalization as of April 23: $1.78 billion

Number of Hedge Fund Holders: 40

Average Upside Potential as of April 23: 59.53%

The Chemours Company (NYSE:CC) provides performance chemicals internationally. It operates through three segments: Thermal & Specialized Solutions, Titanium Technologies, and Advanced Performance Materials. It sells its products through direct and indirect channels, as well as through a network of resellers, third-party sales agents, and distributors.

The company’s Thermal & Specialized Solutions (TSS) segment produces and sells refrigerants. The Opteon Refrigerants are a key product line in this segment and are designed to replace older and environmentally harmful refrigerants with more sustainable alternatives. In Q4 2024, TSS net sales hit a record $390 million, which was a 3% improvement year-over-year. Opteon sales alone surged 23%.

The company expanded Opteon capacity at Corpus Christi by 40%, with half available in 2025 and the rest in 2026. This supports Chemours’ anticipated double-digit Opteon growth in 2025.  However, BMO Capital analyst John McNulty recently reduced his price target for The Chemours Company (NYSE:CC) from $34 to $27 while maintaining an Outperform rating due to the company’s weaker-than-expected Q4 earnings and outlook. The analyst thinks that the company may experience a slow start in Q1 2025.

Buckley Capital sees strong growth and high-profit potential in the company’s TSS division due to its environmentally friendly, high-margin Opteon product. It stated the following regarding Chemours Co. (NYSE:CC) in its Q3 2024 investor letter:

The Chemours Company (NYSE:CC) is an investment we have owned since 2018, very profitably until this year. It is composed of 3 different businesses – TSS, APM, and TT – that are each the #1 or #2 players in their respective categories.

The company’s Thermal & Specialized Solutions division (TSS) sells environmentally friendly refrigerants on a global basis, with the primary refrigerants being Opteon and Freon. Opteon is more environmentally friendly, therefore Freon is being slowly phased out by government mandate. This is very beneficial for Chemours since Opteon is very high-margin and has little competition, whereas Freon has more competitors and overall lower margins. This should lead to high single-digit growth in the TSS segment, with 30%+ EBITDA margins. We believe it is possible TSS margins could get to 40%, given that they have neared that number in the past and that as Chemours sells more Opteon, its margins should trend higher. This means TSS should be able to earn around $800m in EBITDA in the next 2 years…” (Click here to read the full text)

7. Peabody Energy Corp. (NYSE:BTU)

Market Capitalization as of April 23: $1.47 billion

Number of Hedge Fund Holders: 41

Average Upside Potential as of April 23: 61.56%

Peabody Energy Corp. (NYSE:BTU) engages in the coal mining business. It operates through Seaborne Thermal, Seaborne Metallurgical, Powder River Basin, Other US Thermal, and Corporate & Other segments. The company also engages in the trading of coal and freight-related contracts, as well as provides transportation-related services.

Peabody’s Seaborne Metallurgical (Met) segment is positioned for growth, with the pending acquisition of premium hard coking coal mines from Anglo American. In Q4 2024, this segment reported $23 million of adjusted EBITDA on shipments of 8.5 million tons for the full year, which was a 0.4 million ton increase year-over-year. The average realized price decreased by about $21 per ton in Q4 sequentially due to a higher mix of Shoal Creek sales.

The Anglo American acquisition is expected to transform Peabody Energy Corp. (NYSE:BTU) into a leading seaborne met coal supplier, with projections indicating that ~three-fourths of the company’s EBITDA in 2026 will come from metallurgical coal. The acquired mines are anticipated to produce 11.3 million tons of saleable coal in the first full year of ownership, which is 2026.

6. Acadia Healthcare Company Inc. (NASDAQ:ACHC)

Market Capitalization as of April 23: $1.99 billion

Number of Hedge Fund Holders: 46

Average Upside Potential as of April 23: 84.59%

Acadia Healthcare Company Inc. (NASDAQ:ACHC) provides behavioral healthcare services in the US and Puerto Rico. It develops and operates acute inpatient psychiatric facilities, specialty treatment facilities that include residential recovery facilities & eating disorder facilities, comprehensive treatment centers, and residential treatment centers.

In 2024, Acadia completed the construction on ~1,300 beds, with ~1,100 completed during Q4. A total of 776 new beds became operational in 2024, which included the opening of 4 new acute inpatient hospitals. In Q4 alone, 577 newly constructed beds became operational, with 344 of these in new facilities. This continued into the first 2 months of 2025, with an additional 313 licensed beds added.

Same facility patient days also grew by 3.2% in Q4 and remained stable between 3% and 4% throughout the quarter. Acadia is also growing through Twin Venture Partnerships with well-respected health systems. It opened a 144-bed joint venture hospital with Intermountain Health in Denver in Q4 and a 192-bed joint venture hospital with Henry Ford Health in Detroit recently. In 2025, Acadia expects to add between 800 and 1,000 total beds.

5. Five9 Inc. (NASDAQ:FIVN)

Market Capitalization as of April 23: $1.79 billion

Number of Hedge Fund Holders: 40

Average Upside Potential as of April 23: 101.78%

Five9 Inc. (NASDAQ:FIVN) provides intelligent cloud software for contact centers in the US and internationally. It offers a CX platform that delivers several applications. It enables the breadth of customer service, sales, and marketing functions. It serves customers in industries like financial services, business process outsourcers, retail, healthcare, technology, and education.

On April 3, William Blair analyst Arjun Bhatia reiterated his bullish stance on the stock and assigned it a Buy rating. The analyst highlighted Five9’s recent announcement of a 4% reduction in workforce to focus on AI investments and innovation, which enables it to better capitalize on future AI opportunities. Five9’s Enterprise AI revenue grew by 46% year-over-year in Q4 2024.

This growth has led AI to constitute 9% of the company’s total enterprise subscription revenue. Five9 is successfully penetrating its existing enterprise customer base, with AI bookings to this segment growing by 50% year-over-year in Q4. The company has been ranked as having the best AI solutions in the Baird survey and won the 2024 Aragon Research Innovation Award for AI Contact Centers.

4. Seadrill Ltd. (NYSE:SDRL)

Market Capitalization as of April 23: $1.25 billion

Number of Hedge Fund Holders: 42

Average Upside Potential as of April 23: 126.03%

Seadrill Ltd. (NYSE:SDRL) provides offshore drilling services to the oil and gas industry worldwide. It owns and operates drill ships and semi-submersible rigs for operations in shallow and ultra-deep water in benign and harsh environments. It serves oil super-majors, state-owned national oil companies, and independent oil and gas companies.

Seadrill Ltd. (NYSE:SDRL) secured two significant long-term contract awards in Brazil in December 2024, which are to commence in 2026. These added $1 billion to the backlog and included a mobilization fee exceeding $70 million. These awards for the West Jupiter and the West Telus are for 3-year terms each with Petrobras.

At the end of 2024, the company reported a $1.3 billion contracted backlog, which saw a net increase of $700 million during the period. This backlog provides revenue visibility, which extends meaningfully through 2028 and into 2029, with ~90% of the midpoint of the 2025 revenue guidance ($1.3 to $1.36 billion) already secured within this backlog.

Despite broader energy sector headwinds, Patient Capital Management is positive on the company and stated the following regarding Seadrill Limited (NYSE:SDRL) in its Q3 2024 investor letter:

“Energy names disappointed in the quarter following commodity prices lower throughout the period. We took the opportunity to add to our highest conviction ideas. We look to names that have idiosyncratic opportunities and are attractive in a variety of different commodity price environments. Many see risk to energy prices over the next year as supply is expected to outstrip demand by 1.3mb/d even before assuming any incremental OPEC supply comes onto the market. With commodities, consensus is rarely right. We assess companies on through cycle returns and normalized prices. From this perspective, we see a handful of attractive opportunities, including Energy Transfer (ET), Seadrill Limited (NYSE:SDRL) and Kosmos (KOS).

Seadrill benefits from a consolidated industry, with more rational players, and an emerging supply and demand imbalance. We think over time as offshore drilling plays a bigger role as the marginal producer, Seadrill will benefit from more attractive contract prices.

Seadrill Limited (SDRL) is the fourth largest pure play deepwater drilling specialist. The company emerged from bankruptcy in February 2022 with a net cash position. The company is set to benefit from limited supply and increasing demand in the deepwater drilling rig market. Nearly half of all deepwater drilling rigs in the world were scrapped during the last decade. In addition, player consolidation puts the industry in a more rational position than we have seen historically. As land-based oil production growth comes under pressure, offshore production is receiving renewed interest. With a highly specialized rig base, the company is benefiting from increasing prices which are leading to strong FCF yields given the limited need for CAPEX. The company has committed to returning 50% of free cash flow to shareholders via dividends and buybacks. Over the last 12-months, the company has reduced shares outstanding by 17%. As old contracts roll-over and new contracts are signed at the higher day rates, operating profit and FCF are expected to expand dramatically. Seadrill could either consolidate the space or be acquired.”

3. Structure Therapeutics Inc. (NASDAQ:GPCR)

Market Capitalization as of April 23: $1.34 billion

Number of Hedge Fund Holders: 40

Average Upside Potential as of April 23: 239.27%

Structure Therapeutics Inc. (NASDAQ:GPCR) develops and delivers oral small-molecule therapeutics to treat various chronic diseases with unmet medical needs in the US. Its lead product candidate is GSBR-1290 (Aleniglipron), which is an oral and biased small-molecule agonist of the GLP-1 receptor. It’s in two-phase 2 clinical trials for the treatment of obesity and related conditions.

The company’s Aleniglipron program is central to its strategy in the obesity market. As of February, enrollment is fully completed in both the ACCESS study (~220 adults) and the ACCESS II study (~80 adults), which totals over 300 patients. These studies are evaluating different dose levels (up to 120 mg in ACCESS and higher doses of 180 mg and 240 mg in ACCESS II) with optimized 4-week titration regimens. Topline 36-week data from both ACCESS and ACCESS II are anticipated by year-end 2025.

Positive data from these studies would position aleniglipron as a potentially best-in-class oral GLP-1 small molecule, with the advantage of being combinable with other medicines. With 36-week data expected by the end of 2025, this program is the most advanced in Structure Therapeutics Inc.’s (NASDAQ:GPCR) portfolio and is expected to influence the company’s overall growth trajectory.

2. Edgewise Therapeutics Inc. (NASDAQ:EWTX)

Market Capitalization as of April 23: $1.52 billion

Number of Hedge Fund Holders: 49

Average Upside Potential as of April 23: 245.54%

Edgewise Therapeutics Inc. (NASDAQ:EWTX) is a biopharmaceutical company that discovers, develops, and commercializes therapies to treat muscle disorders. Its lead product candidate, EDG-5506, is an orally administered small molecule that is in Phase II clinical trials. It is designed to address the root cause of dystrophinopathies, such as Duchenne muscular dystrophy and Becker muscular dystrophy.

A Scotiabank analyst recently initiated coverage on Edgewise with a price target of $50 and an Outperform rating. The analyst noted promising early clinical data from sevasemten, which is being studied for both Becker and Duchenne muscular dystrophy, and EDG-7500 for Hypertrophic Cardiomyopathy (HCM). Edgewise’s EDG-7500 program, in particular, is showing significant promise.

Top-line data from the Phase 2 CIRRUS-HCM 4-week trial, announced in April, demonstrated clinically meaningful reductions in Left Ventricular Outflow Tract gradients (LVOT-G) in participants with obstructive HCM. Building on these positive results, Edgewise is optimizing its dosing strategy in Part D of the CIRRUS-HCM trial, with initial data expected in H2 2025, and plans to initiate a Phase 3 trial in H1 2026. Given the significant unmet need for additional therapies in HCM, a disease affecting ~1 in 500 people, the development of EDG-7500 represents a growth opportunity for Edgewise.

Baron Health Care Fund is is highly positive on the company and stated the following regarding Edgewise Therapeutics, Inc. (NASDAQ:EWTX) in its Q4 2024 investor letter:

“We initiated a position in Edgewise Therapeutics, Inc. (NASDAQ:EWTX), which develops drugs that target muscle physiology, including sevasemten to treat Becker’s muscular dystrophy (BMD) and Duchenne muscular dystrophy (DMD), and EDG-7500 to treat hypertrophic cardiomyopathy (HCM). Sevasemten is a myosin inhibitor that is designed to protect fast-twitch muscle against contraction-induced injury in muscular dystrophy patients. Sevasemten recently showed impressive Phase 2 data in Becker’s patients that suggests a meaningful benefit in muscle function that will likely translate into Phase 3 success. There are no medicines approved specifically for Becker’s patients today, and we think this could be a $1 billion drug. We think the drug should also work in Duchenne’s muscular dystrophy, since Duchenne’s is driven by the same underlying dysfunction in dystrophin protein as Becker’s. Edgewise is also developing EDG-7500, which targets cardiac sarcomere to treat hypertrophic cardiomyopathy. Although it’s early in development, EDG-7500 has shown early data that suggested impressive efficacy on LVOT gradient reduction without meaningful safety risks in the form of changes in ejection fraction. If this is borne out in more clinical trials, this would be an important point of differentiation versus existing treatments for HCM, which require patient monitoring and dose titration to avoid safety risks.”

1. Dyne Therapeutics Inc. (NASDAQ:DYN)

Market Capitalization as of April 23: $1.26 billion

Number of Hedge Fund Holders: 41

Average Upside Potential as of April 23: 351.88%

Dyne Therapeutics Inc. (NASDAQ:DYN) is a clinical-stage neuromuscular disease company that operates as a biotechnology company that is advancing therapeutics for genetically driven muscle diseases in the US. It’s developing a portfolio of muscle disease therapeutics with the help of its FORCE platform that delivers disease-modifying therapeutics.

The company’s DYNE-251 program is a key focus for the company and targets individuals with Duchenne Muscular Dystrophy (DMD) who are amenable to exon 51 skipping. Data from the ongoing Phase 1/2 DELIVER trial has shown near-full-length dystrophin expression. Patients treated with the selected registrational dose of 20 mg/kg every 4 weeks showed a mean absolute dystrophin expression of 8.72% of normal (adjusted for muscle content) at the 6-month time point.

The DELIVER Registrational Expansion Cohort of 32 patients is now fully enrolled, with data expected in late 2025. Dyne anticipates a potential BLA submission for US accelerated approval for DYNE-251 in early 2026, based on dystrophin expression as a surrogate biomarker. The company believes that if approved, DYNE-251 has the potential for rapid adoption in the DMD community. BMO Capital Markets initiated coverage on Dyne on March 12 with an Outperform rating and a $50 price target.

While we acknowledge the growth potential of Dyne Therapeutics Inc. (NASDAQ:DYN), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DYN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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.