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.
10. Minerals Technologies Inc. (NYSE:MTX)
Market Cap: $1.76 billion
Forward P/E: 10.76
Number of Hedge Fund Holders: 20
Minerals Technologies Inc. (NYSE:MTX) is one of the most undervalued small cap stocks to invest in now. Truist Financial analyst Pete Osterland reiterated a Buy rating on Minerals Technologies Inc. (NYSE:MTX) on October 24, setting an $84 price target.
The rating update came after the company reported its fiscal Q3 2025 results on October 23, reporting worldwide net sales of $532 million, up 1% sequentially and up 1% year-over-year.
Reported operating income for the quarter was $71 million, or $78 million excluding special items, reflecting a 1% drop sequentially and year-over-year. Operating margin, excluding special items, was 14.7% of sales.
Minerals Technologies Inc. (NYSE:MTX) also reported $71 million in cash flow from operations, while free cash flow came up to $44 million. EPS for fiscal Q3 was $1.37, or $1.55 excluding special items, setting a third-quarter record for the company.
Minerals Technologies Inc. (NYSE:MTX) is a resource and technology-based company that provides mineral, mineral-based, and synthetic mineral products. The company’s operations are divided into the Consumer and Specialties and Engineered Solutions segments.
9. Fidelis Insurance Holdings Limited (NYSE:FIHL)
Market Cap: $1.89 billion
Forward P/E: 9.84
Number of Hedge Fund Holders: 20
Fidelis Insurance Holdings Limited (NYSE:FIHL) is one of the most undervalued small cap stocks to invest in now. On October 8, Barclays lifted the price target on Fidelis Insurance Holdings Limited (NYSE:FIHL) to $19 from $17 while keeping an Equal Weight rating on the shares. The rating update was released as part of a Q3 earnings preview for the property and casualty insurance group.
The firm told investors that the setup for the sector is largely consistent with the previous quarter, with the continuation of pricing pressure across lines. However, the firm believes that the drop in the volume of property catastrophe premiums renewing in the third quarter “may offer a modest quarter-over-quarter reprieve.”
Keefe Bruyette also lifted the price target on Fidelis Insurance Holdings Limited (NYSE:FIHL) to $24 from $22 on October 6, while maintaining an Outperform rating on the shares.
In addition, Fidelis Insurance Holdings Limited (NYSE:FIHL) received a rating update from Evercore ISI on October 1, with the firm raising its price target on the stock to $19 from $18 while keeping an In Line rating.
The firm told investors that it is updating the price targets for the Global Insurance P&C companies under its coverage, and is expecting Q3 to be a “solid quarter” irrespective of the sector’s underperformance and mixed stock price performance.
Fidelis Insurance Holdings Limited (NYSE:FIHL) is a global specialty insurer that leverages strategic partnerships to provide tailored and innovative insurance solutions. The company’s operations are divided into the following segments: Insurance and Reinsurance.
8. XPLR Infrastructure (NYSE:XIFR)
Market Cap: $1.88 billion
Forward P/E: 1.17
Number of Hedge Fund Holders: 21
XPLR Infrastructure (NYSE:XIFR) is one of the most undervalued small cap stocks to invest in now. CIBC lifted the price target on XPLR Infrastructure (NYSE:XIFR) to $11.50 from $11 on October 21, while keeping a Neutral rating on the shares. The firm told investors that it anticipates Regulated Utilities to meet or surpass consensus, supported by new rates and generally solid loads.
It added that although Q3 results likely favor the Utilities sector, the firm is still positive towards the Power names more from an investment landscape, considering more growth and valuation upside, along with better momentum.
The firm said that it anticipates Power companies to deliver generally softer results, provided muted realized pricing trends and less favorable generation trends in key regions for most.
CIBC further stated that markets and credit spreads have been increasingly volatile, and for a defensive hedge, investors should still hold some regulated exposure.
XPLR Infrastructure (NYSE:XIFR) is involved in the management, acquisition, and ownership of contracted clean energy portfolios with long-term cash flows. The company’s focus is on solar, battery storage, and wind initiatives.
7. OFG Bancorp (NYSE:OFG)
Market Cap: $1.75 billion
Forward P/E: 9
Number of Hedge Fund Holders: 23
OFG Bancorp (NYSE:OFG) is one of the most undervalued small cap stocks to invest in now. On October 27, Wells Fargo analyst Timur Braziler slashed the price target on OFG Bancorp (NYSE:OFG) to $43 from $48 while keeping an Equal Weight rating on the shares.
The firm told investors that it expects a tough stretch ahead, with increased deposit competition and rate cuts potentially weighing on net interest income through most of the first half of 2026.
The rating update came after OFG Bancorp (NYSE:OFG) announced its fiscal Q3 results on October 22, reporting EPS diluted of $1.16, compared to $1.15 in fiscal Q2 2025 and $1.00 in fiscal Q3 2024. Total core revenue for fiscal Q3 2025 came up to $184.0 million, compared to $174.1 million in the prior year period.
Chief Executive Officer of OFG Bancorp (NYSE:OFG), José Rafael Fernández, stated that the Q3 EPS rose 16% year-over-year on a 5.6% growth in total core revenues. Performance and credit metrics for the quarter remained strong, and the company repurchased $20.4 million of common shares.
OFG Bancorp (NYSE:OFG) provides banking and financial services. The company operates through the Banking, Wealth Management, and Treasury segments.
6. Skyward Specialty Insurance Group Inc. (NASDAQ:SKWD)
Market Cap: $1.83 billion
Forward P/E: 12.84
Number of Hedge Fund Holders: 24
Skyward Specialty Insurance Group Inc. (NASDAQ:SKWD) is one of the most undervalued small cap stocks to invest in now. Citizens JMP analyst Matthew Carletti maintained a Buy rating on Skyward Specialty Insurance Group Inc. (NASDAQ:SKWD) on October 14, setting a $70 price target.
Skyward Specialty Insurance Group Inc. (NASDAQ:SKWD) also received a rating update from Keefe Bruyette analyst Meyer Shields on October 6, who lifted the price target on the stock to $64 from $63 while keeping an Outperform rating on the shares.
The same day, Skyward Specialty Insurance Group Inc. (NASDAQ:SKWD) was initiated with a Buy rating and a $60 fair value estimate by Janney Montgomery Scott. The firm told investors that it likes the company’s pending acquisition of Apollo Group and “Rule Our Niche” strategy, expecting these factors to “enhance its competitive position and flexibility”.
The firm added that according to its peer group analysis, shares of the stock “appear attractively valued relative to performance expectations”.
Skyward Specialty Insurance Group Inc. (NASDAQ:SKWD) is a specialty insurance company that provides commercial property and casualty (P&C) solutions and products on an admitted and non-admitted basis, predominantly in the US. It specializes in industry solutions, healthcare professional liability, medical stop-loss, management and professional liability, specialty property and liability, programs and captive solutions, and surety.
5. Select Medical Holdings Corporation (NYSE:SEM)
Market Cap: $1.76 billion
Forward P/E: 12.37
Number of Hedge Fund Holders: 25
Select Medical Holdings Corporation (NYSE:SEM) is one of the most undervalued small cap stocks to invest in now. Select Medical Holdings Corporation (NYSE:SEM) received a rating update from Benchmark Co. analyst Bill Sutherland on October 27, who maintained a Buy rating on the stock with a $21 price target.
RBC Capital also lifted its price target on the stock to $20 from $16 on October 8 and maintained an Outperform rating on the shares. The firm told investors that it considers the dislocation seen in the stock as an attractive entry point with lifting regulatory headwinds.
It added that the firm’s higher price target shows an easing of regulatory headwinds and a more appropriate LTAC multiple assumption going into the future.
Similarly, Select Medical Holdings Corporation (NYSE:SEM) received a Buy rating from Bank of America Securities analyst Joanna Gajuk on October 8, who set a $15 price target for the shares.
The analyst based the rating update on the recent delay of the 20% Rule by CMS, potentially helping the company reverse a considerable reserve it had booked earlier in the year. The analyst expects this factor to enhance Select Medical Holdings Corporation’s (NYSE:SEM) financial outlook for fiscal Q3 2025.
Select Medical Holdings Corporation (NYSE:SEM) provides medical rehabilitation services, with its operations divided into the following business segments: Critical Illness Recovery Hospital, Rehabilitation Hospital, and Outpatient Rehabilitation.
4. Adient plc (NYSE:ADNT)
Market Cap: $1.92 billion
Forward P/E: 12.33
Number of Hedge Fund Holders: 27
Adient plc (NYSE:ADNT) is one of the most undervalued small cap stocks to invest in now. JPMorgan lifted its price target on Adient plc (NYSE:ADNT) to $26 from $22 on October 20, while keeping a Neutral rating on the shares.
The rating update was a part of a Q3 preview for the autos group, with the firm telling investors that it raised its estimates for its preferred sector segment, the auto suppliers, because of favorable trends in commodities and currencies and solid global light vehicle production.
The firm also slashed estimates for rental car companies and tiremakers, citing more aggressive pricing and a rise in low-cost imports as significant factors supporting the move, respectively.
The same day, Stifel also raised its price target on Adient plc (NYSE:ADNT) to $29 from $27 while keeping a Buy rating on the shares.
The firm believes that following considerable uncertainty in the global macro economy after April 2, the biggest adjustment it has seen for its industrial companies is a rise in pricing. It added that this has been almost exclusively shifted to customers with little resistance.
Adient plc (NYSE:ADNT) is involved in the manufacture, design, and marketing of automotive seating systems. The company’s operations span the following geographical segments: Americas, EMEA, and Asia.
3. O-I Glass, Inc. (NYSE:OI)
Market Cap: $1.86 billion
Forward P/E: 8.56
Number of Hedge Fund Holders: 29
O-I Glass, Inc. (NYSE:OI) is one of the most undervalued small cap stocks to invest in now. On October 13, Truist analyst Michael Roxland slashed the firm’s price target on O-I Glass, Inc. (NYSE:OI) to $17 from $21 while keeping a Buy rating on the stock. The rating update was released as part of a broader research note previewing Q3 results in the Packaging and Paper/Forest products sector.
The firm told investors that it is undertaking a selective adjustment of its estimates after meeting with companies in its coverage for a review of the quarterly trends. It also cited the $40/ton containerboard price hike, which is effective February 2026, as a notable factor.
Similarly, BofA lowered its price target on O-I Glass, Inc. (NYSE:OI) to $13 from $14 on October 9 and set a Neutral rating on the stock. The firm told investors that it sees a “mixed” Q3 for the packaging and paper/forest sector, with renewed pressure on the stocks. It also cited the 15% decline in the stock relative to the market since June 30.
O-I Glass, Inc. (NYSE:OI) manufactures glass products, offering them to the food and beverage sector. The company’s operations are divided into the Americas and Europe geographical segments.
2. Five9, Inc. (NASDAQ:FIVN)
Market Cap: $1.83 billion
Forward P/E: 8.16
Number of Hedge Fund Holders: 40
Five9, Inc. (NASDAQ:FIVN) is one of the most undervalued small cap stocks to invest in now. Five9, Inc. (NASDAQ:FIVN) was initiated with an Equal Weight rating and a $30 price target by Morgan Stanley analyst Elizabeth Porter on October 21.
The rating update came as a preview for the communication software group, and the firm told investors that while the Q3 checks came out generally stable overall, they were moderated relative to the sequential improvement of fiscal Q2.
Morgan Stanley further stated that expectations are low across the group, and it does not see a meaningful shift in investor perception with potential upside in results.
Five9, Inc. (NASDAQ:FIVN) was also initiated with an Equal Weight rating and a $28 price target at Wells Fargo on September 30, with the firm telling investors that it sees a balance risk/reward at the current share levels. While the firm believes that Five9, Inc. (NASDAQ:FIVN) is seeing improved bookings and early AI traction, it sees a tougher environment going forward.
Five9, Inc. (NASDAQ:FIVN) provides cloud software for contact centers, specializing in omnichannel routing, workforce organization, analytics, and reporting.
1. Tripadvisor, Inc. (NASDAQ:TRIP)
Market Cap: $1.91 billion
Forward P/E: 11.14
Number of Hedge Fund Holders: 40
Tripadvisor, Inc. (NASDAQ:TRIP) is one of the most undervalued small cap stocks to invest in now. On October 24, BMO Capital analyst Brian Pitz reiterated a Hold rating on Tripadvisor, Inc. (NASDAQ:TRIP) and set a $15 price target. Similarly, UBS analyst Stephen Ju maintained a Hold rating on the stock the same day, setting a $19 price target.
Separately, Reuters reported on October 21 that Starboard Value CEO Jeff Smith, speaking at the annual 13D Monitor Active Passive Investment Summit in New York, stated that while Tripadvisor, Inc. (NASDAQ:TRIP) has an “amazing” brand, “there is a huge opportunity to transform and reimagine the user experience to improve revenue growth.”
He added that TheFork, which offers restaurant reservation services, is “the most easily separable and least-integrated of the three businesses”, and could be “sold at an attractive multiple,” with even opportunity to sell the entire company.
“There are standalone opportunities for value creation at each of the Tripadvisor three businesses as well as an opportunity to potentially sell TheFork or the entire company,” Smith stated.
Reuters reported that while engagement between Starboard and Tripadvisor, Inc. (NASDAQ:TRIP) has been continuing for several weeks, this was the first time Smith indulged in a public discussion of his team’s thesis. Tripadvisor, Inc. (NASDAQ:TRIP) said in a statement that:
“We value constructive engagement with all of our shareholders and appreciate their feedback. The Tripadvisor Board of Directors and management team are committed to driving long-term value for our shareholders.”
Tripadvisor, Inc. (NASDAQ:TRIP) is an online travel company that operates and owns a portfolio of online travel brands. The company’s operations are divided into the following segments: Brand Tripadvisor, Viator, and TheFork.
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