In this article, we will look at the 12 Most Undervalued Small Cap Stocks to Invest In Now.
On October 3, Jill Carey Hall, head of U.S. small and mid cap strategy at Bank of America, appeared on CNBC’s “Money Movers” to talk about small cap stocks.
She stated that they have been constructive on small caps since the end of August, with three factors turning more positively for the size segment, including the Fed’s rate cutting cycle given the rate sensitivity of small caps and all of the refinancing risks. The second is the earnings backdrop, which, according to her, took longer than expected but still managed to show signs of recovery in small caps as of this earnings season. She cited earnings revision ratios turning positive, and guidance getting a lot more positive for these stocks.
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The question now, Hall stated, is how sustainable this recovery is, and whether this profit recovery is real. It is, however, a positive that the broadening out of the profits recovery is now extending to small caps. She added that consensus expectations show that small caps see better profit growth than large caps later this year and throughout next year.
With these trends in view, let’s look at the most undervalued small cap stocks to invest in now.
Our Methodology
We used Finviz to compile a list of small cap stocks (market cap between $300 million and $2 billion) with a forward P/E below 20 and selected the top 12 with the highest number of hedge fund holders as of Q2 2025, sourcing the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Note: All data was recorded on October 28.
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).
12 Most Undervalued Small Cap Stocks to Invest In Now
12. Nicolet Bankshares, Inc. (NYSE:NIC)
Market Cap: $1.78 billion
Forward P/E: 13.47
Number of Hedge Fund Holders: 10
Nicolet Bankshares, Inc. (NYSE:NIC) is one of the most undervalued small cap stocks to invest in now. Piper Sandler analyst Nathan Race maintained a Hold rating on Nicolet Bankshares, Inc. (NYSE:NIC) on October 24, setting a price target of $140.
The rating update followed the company’s announcement on October 23 in conjunction with MidWestOne Financial Group, Inc., the execution of a definitive merger agreement, according to which Nicolet Bankshares, Inc. (NYSE:NIC) will acquire MidWestOne and its wholly-owned banking subsidiary, MidWestOne Bank.
Management reported that the pro forma total assets of the combined company would come up to $15.3 billion, deposits of $13.1 billion, and loans of $11.3 billion, based on financial results as of September 30. Nicolet Bankshares, Inc. (NYSE:NIC) will have over 110 branches upon the closing of the transaction, along with loan production offices across Denver, the Upper Midwest, Florida, and Colorado, and Naples, among other areas.
Nicolet Bankshares, Inc. (NYSE:NIC) further reported that the terms of the agreement have been unanimously approved by the board of directors of both companies, with Nicolet Bankshares, Inc. (NYSE:NIC) exchanging shares of its common stock in an all-stock transaction for all of the outstanding shares of MidWestOne common stock.
MidWestOne shareholders “will be entitled to receive 0.3175 of a share of Nicolet common stock for each share of MidWestOne common stock they own upon the effective time of the merger, for aggregate merger consideration valued at approximately $864 million, or $41.37 per share, based on Nicolet’s closing stock price of $130.31 as of October 22, 2025”.
Nicolet Bankshares, Inc. (NYSE:NIC) provides commercial and consumer banking services through its subsidary, offering brokerage, ancillary banking-related, lending and deposit gathering, trust, and other investment management services and products. The company also provides commercial-related and residential real estate loans.
11. UTZ Brands, Inc. (NYSE:UTZ)
Market Cap: $1.73 billion
Forward P/E: 15
Number of Hedge Fund Holders: 20
UTZ Brands, Inc. (NYSE:UTZ) is one of the most undervalued small cap stocks to invest in now. RBC Capital analyst Nik Modi reiterated a Buy rating on UTZ Brands, Inc. (NYSE:UTZ) on October 28, setting a $20 price target.
However, UTZ Brands, Inc. (NYSE:UTZ) received a Hold rating from UBS analyst Peter Grom on October 20, with a $13.50 price target.
Basing his rating on the company’s current market position, Grom stated that while UTZ Brands, Inc. (NYSE:UTZ) has unchanged guidance for fiscal year 2025 with expectations for modest EBITDA margin expansion and organic sales growth, the overall sentiment associated with the salty snacks domain remains cautious.
Although UTZ Brands, Inc. (NYSE:UTZ) is exhibiting favorable performance trends that surpass the overall salty snacks domain, concerns about the sustainability of the company’s top-line growth still exist, especially in the backdrop of continuing macroeconomic and category pressures, according to the analyst.
Grom thus stated that such concerns have caused a drop in the stock’s performance, resulting in it underperforming compared to the broader market and its peers since early August.
UTZ Brands, Inc. (NYSE:UTZ) markets, manufactures, and distributes branded snacks. Its portfolio includes a range of salty snacking products, such as pretzels, potato chips, veggie, cheese, and pork skins. The company’s brands include Utz, Golden Flake, Zapp’s, Good Health, Hawaiian, and Boulder Canyon.
