12 Small Cap Stocks to Buy with Huge Upside Potential

5. Vital Farms, Inc. (NASDAQ:VITL)

Analyst Upside: 52.91%

Market Cap: $1.47 billion

Number of Hedge Fund Holders: 33

Vital Farms, Inc. (NASDAQ:VITL) is one of the best small cap stocks to buy with huge upside potential. On December 18, TD Cowen analyst Robert Moskow slashed the price target on Vital Farms, Inc. (NASDAQ:VITL) to $44 from $59 while reiterating a Buy rating on the stock.

The firm told investors that it attended the company’s investor day, where Vital Farms, Inc. (NASDAQ:VITL) established an aggressive $2 billion sales target for 2030, supported by unlocking of capacity constraints, rising brand awareness, growing household penetration, and expansion of shelf space. However, the firm added that the company’s 2025 guidance cut added to market concerns regarding susceptibility to an increasingly price sensitive consumer and crowded premium egg category.

In another development, Morgan Stanley cut the price target on Vital Farms, Inc. (NASDAQ:VITL) to $45 from $48 on December 17, and maintained an Overweight rating on the stock. The firm told investors that Vital Farms, Inc. (NASDAQ:VITL) updated its long-term algorithm with above-consensus targets at its investor day. However, this was overshadowed according to the analyst, and the previous day’s stock reaction was driven by an “unexpected” 2025 revenue guidance cut. Still, the firm sees the event as providing additional visibility into “a long, underappreciated growth runway.”

The rating updates came after Vital Farms, Inc. (NASDAQ:VITL) announced on December 16 that it updated its long-term financial targets, and expects a multi-year path toward a net revenue of $2 billion by 2030, and 15% to 17% adjusted EBITDA margins by 2030. In addition, the company expects gross margins of 35+% between 2025 and 2030 as it continually drives expands household penetration and brand loyalty, increases brand awareness, continues scaling of its supply chain, and deepens distribution, establishing 2030 as its new long-term planning horizon.

Vital Farms, Inc. (NASDAQ:VITL) packages, markets, and distributes pasture-raised butter, shell eggs, and other products. It sells its products primarily to retail food service channels under the trade names Vital Farms, Alfresco Farms, Lucky Ladies, and RedHill Farms.