In this article, we will look at the 8 Must-Buy Small Cap Stocks to Buy.
After many years of large capitalization companies dominating the US equities market, time is ripe for rotation. This was the main projection by Rockefeller Capital Management’s 2026 Outlook on Small and SMID Cap Equity. The outlook projected that smaller companies, which are companies with a market capitalization below $2 billion but more than $300 million, will grow earnings at 17% in 2026. This growth is well ahead of the S&P 500’s estimated 14% earnings growth rate. Rockefeller believes this earnings acceleration could trigger a rotation of fund flows away from large caps and into small and small- and mid-capitalization, or SMID caps, and that it views this shift as “directly supportive of small cap performance.”
That thesis is already playing out, according to analyses such as that of Franklin Templeton published on April 8. Franklin Templeton noted that both the Russell Microcap and the Russell 2000 finished the first quarter of 2026 in positive territory; the Russell 2000 gained 0.9% and the Russell Microcap added 1.5%. Contrarily, the Russell 1000 Index, which tracks large cap companies, declined 4.2%, and the mega-cap Russell Top 50 Index fell 7.9%.
To explain the scale of this divergence, Franklin Templeton noted that the Russell 1000 has logged 26 down quarters over the past 25 years, and the Russell 2000 has outperformed its large-cap sibling in only eight of those instances, including Q12026. The only other time small caps posted a positive return during a down quarter for large caps was in the second quarter of 2008, at the height of the Great Financial Crisis.
For the Financial Times’ Robert Armstrong, US small caps are outperforming big caps by 8.5% year-to-date. This is remarkable on its own, but especially so given the chronic underperformance small stocks had endured over the prior six years, Armstrong wrote in the Unhedged column on April 10.
Armstrong identified energy as the key driver behind the shift. Energy is the best-performing sector of 2026 by a wide margin, and which carries a 6.5% weighting in the S&P 600, he said. This is nearly double its 3.5% share in the large-cap S&P 500. He added that small-cap energy stocks are up 41% year-to-date, which is well ahead of the 29% gain posted by large-cap energy.
Against this backdrop, this article highlights eight small-cap names positioned to capitalize on this rotation.
Our Methodology
To compile this list, we used the Finviz Stock Screener to shortlist companies with a market capitalization between $300 million and $2 billion, and filtered for those that have gained more than 50% year-to-date and have upside potential of more than 10% as of April 16, 2026 . We also considered the popularity of these companies among hedge funds using the Q4 2025 13F filings from the Insider Monkey database. The stocks are ranked in ascending order based on the number of hedge fund holders.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Must-Buy Small Cap Stocks to Buy
8. Pulse Biosciences, Inc. (NASDAQ:PLSE)
Number of Hedge Fund Holders: 7
Year-To-Date Performance: 53.17%
Market Capitalization: $1.39 billion
Stock Upside: 58.56%
Pulse Biosciences, Inc. (NASDAQ:PLSE) is one of the must-buy small cap stocks to buy. On April 7, Pulse Biosciences, Inc. announced that it had enrolled the first patients in NANOPULSE-AF. This is the company’s US clinical trial testing the nPulse Cardiac Catheter System as a treatment for occasional episodes of irregular heart rhythm that doesn’t respond to drugs, or what the company describes as drug-resistant, symptomatic paroxysmal atrial fibrillation.
According to the press release, the first seven patients were treated at St. Bernards Medical Center in Jonesboro, Arkansas. Dr. Devi Nair of the Arrhythmia Research Group, led the exercise and Dr. Vivek Reddy, Director of Cardiac Arrhythmia Services at New York’s Mount Sinai Fuster Heart Hospital, was the overall principal investigator for the study. The trial plans to enroll about 215 patients across up to 30 centers in the U.S. and Europe, and the primary safety and effectiveness endpoints will be measured at 6 and 12 months post-procedure, the company said.
This trial builds on encouraging results from a prior European first-in-human feasibility study. Here, the company achieved 100% acute success and 96% sustained procedural success at 12 months across 75 evaluable patients. The study achieved these outcomes without anti-arrhythmic drugs. The new US-based study follows the FDA’s grant of an investigational device exemption to Pulse Biosciences in December 2025. This nod gave the company regulatory clearance to begin the study.
Pulse Biosciences, Inc. is a medical technology company. It develops bioelectric therapies using its proprietary Nanosecond Pulsed Field Ablation (nsPFA) technology. The company is advancing its nPulse platform across multiple applications, including cardiac ablation, tumor treatment, and soft tissue procedures.
7. United States Antimony Corp. (NYSE:UAMY)
Number of Hedge Fund Holders: 18
Year-To-Date Performance: 75.72%
Market Capitalization: $1.49 billion
Stock Upside: 21.59%
United States Antimony Corp. (NYSE:UAMY) is one of the must-buy small cap stocks to buy. On April 10, United States Antimony Corp. released a Technical Report Summary, or TRS, for its Fostung Project, which is an intermediate-stage tungsten exploration asset located in Foster Township, Sudbury District, Ontario, Canada.
According to the report, the Fostung Project consists of 50 contiguous single-cell mining claims. This covers approximately 1,109 hectares and hosts a skarn-type tungsten deposit, or scheelite, with associated molybdenum, copper, and silver mineralization. The project is held by UAMY Cobalt Corporation, a wholly owned subsidiary of United States Antimony.
The updated resource model estimates 14.7 million tons of Inferred Mineral Resources at a grade of 0.17% tungsten trioxide, or WO₃, and contain nearly 54 million pounds of WO3. The company classified the resources as “Inferred” because the resources are not “Measured” or “Indicated” at this stage. Also, this means no mineral reserves were established and that the project has not yet demonstrated economic viability.
SRK Consulting (Canada) Inc. prepared the TRS. The firm recommended a roughly $4 million work program to advance the Fostung Project towards a Preliminary Economic Assessment, or PEA. The program should cover 8,000 meters of additional drilling, expanded metallurgical testwork, geotechnical and environmental baseline studies, and updated resource modeling.
The TRS positioned the Fostung Project as one of North America’s larger undeveloped tungsten resources. Also, United States Antimony noted potential eligibility for support under the U.S. Defense Production Act Title III.
United States Antimony Corp. is a mining and minerals processing company. It produces and sells antimony, zeolite, and precious metals, and its operations span mining claims, smelting, and refining facilities in North America.
6. Climb Bio Inc (NASDAQ:CLYM)
Number of Hedge Fund Holders: 20
Year-To-Date Performance: 135.20%
Market Capitalization: $601.38 million
Stock Upside: 94.22%
Climb Bio Inc (NASDAQ:CLYM) is one of the must-buy small cap stocks to buy. On April 7, BTIG reaffirmed its Buy rating and $8 price target on Climb Bio Inc.
The investment bank made the move after Climb announced it had received FDA Fast Track Designation for its lead drug candidate, budoprutug. Budoprutug is a drug that targets CD19 monoclonal antibodies. It is designed to seek out and deplete specific immune cells called B cells, which are responsible for producing the harmful autoantibodies that power rare kidney diseases like primary membranous nephropathy, or pMN.
BTIG’s reason for staying bullish is that budoprutug is not starting from scratch scientifically. In the analysts’ view, the drug is preceded and de-risked by off-label use of anti-CD20 monoclonal antibodies. Put simply, doctors have already been using a related class of drugs to treat similar conditions, and that this provides a clinical reference point that lowers budoprutug’s development risk. The analysts argued that because budoprutug is building on a proven foundation, its mechanism should deliver deeper B-cell depletion. This could translate to faster and more durable disease remission for patients, the analysts noted.
BTIG noted that there are approximately 75,000 pMN patients in the US and currently no FDA-approved treatments for the disease. In other words, budoprutug would effectively be entering an open market with no direct competition if it reaches approval.
Climb Bio Inc is a clinical-stage biotechnology company. It is focused on developing therapies for immune-mediated diseases, with a pipeline centered on monoclonal antibodies targeting B-cell-driven conditions.
5. MapLight Therapeutics, Inc. (NASDAQ:MPLT)
Number of Hedge Fund Holders: 21
Year-To-Date Performance: 70.01%
Market Capitalization: $1.29 billion
Stock Upside: 26.27%
MapLight Therapeutics, Inc. (NASDAQ:MPLT) is one of the must-buy small cap stocks to buy. On April 7, TD Cowen analyst Joseph Thome initiated coverage on MapLight Therapeutics, Inc. with a Buy rating. The analyst cited the company’s pipeline of treatments targeting the central nervous system, or CNS, and neuropsychiatric conditions.
Thome’s bullish thesis is built around ML-007C-MA, which is MapLight’s lead drug candidate designed to improve on the profile of Cobenfy. Cobenfy is a Bristol Myers Squibb (NYSE:BMY) product used for adults with schizophrenia. ML-007C-MA is a Cobenfy competitor and MapLight intends it to work just like the latter but with improved convenience.
MapLight’s drug targets the same M1/M4 receptor mechanism as Cobenfy but with better tolerability, safety, or dosing frequency, according to the company. The company initiated the drug’s Phase 2 trial on September 17, 2025, and expects the data to be out in Q3 2026. MapLight is also running a Phase 2 study of ML-007C-MA in Alzheimer’s psychosis, an indication that, if successful, would significantly expand the drug’s addressable market beyond schizophrenia. A second pipeline asset, ML-004, is in a Phase 2 study for autism spectrum disorder, or ASD, whose data is also anticipated in Q3 2026. Thome noted that the stock is undervalued based on the schizophrenia opportunity alone.
MapLight Therapeutics, Inc. is a clinical-stage biotechnology company. It develops therapies for central nervous system disorders, including schizophrenia, Alzheimer’s disease psychosis, autism spectrum disorder, and Parkinson’s disease. Its pipeline includes multiple drug candidates such as ML-007C-MA and ML-004.
4. Compass Diversified Holdings (NYSE:CODI)
Number of Hedge Fund Holders: 21
Year-To-Date Performance: 127.53%
Market Capitalization: $796.00 million
Stock Upside: 20.51%
Compass Diversified Holdings (NYSE:CODI) is one of the must-buy small cap stocks to buy. On March 30, Compass Diversified Holdings announced it had signed a definitive agreement to sell the foodservice business of its subsidiary, SternoCandleLamp Holdings, Inc., to Archer Foodservice Partners for an enterprise value of $292.5 million. Archer Foodservice Partners is a portfolio company of private equity firm Wynnchurch Capital.
Compass emphasized that it is selling only Sterno’s foodservice operations, not the entire SternoCandleLamp business. Before closing, the company will spin off Sterno’s home fragrance arm and retain it within its own portfolio. It will be operated through a subsidiary called Rimports, LLC.
The asset being sold, Sterno, is a 100-year-old brand headquartered in Texarkana, TX. It is best known for chafing fuel products widely used in catering and hospitality. It also makes buffet accessories, candles, and flameless heating units, mostly manufactured in-house across facilities in Texarkana, Memphis, TN, and La Porte, IN.
According to Compass CEO Elias Sabo, the deal will allow the company to reduce debt. He described the transaction as a critical step in reducing leverage at CODI and part of a broader commitment to “take decisive action – strategically selling businesses, rapidly deleveraging the balance sheet and addressing the gap between the market price and our intrinsic value.”
Compass expects the transaction to close in Q2 2026. This is after regulatory approvals and the execution of a Transition Services Agreement.
Compass Diversified Holdings is a holding company that acquires and manages controlling stakes in middle-market businesses across branded consumer and industrial sectors. Its portfolio includes subsidiaries involved in manufacturing, consumer products, and industrial services.
3. Vir Biotechnology, Inc. (NASDAQ:VIR)
Number of Hedge Fund Holders: 30
Year-To-Date Performance: 73.91%
Market Capitalization: $1.65 billion
Stock Upside: 101.41%
Vir Biotechnology, Inc. (NASDAQ:VIR) is one of the must-buy small cap stocks to buy. On April 13, Vir Biotechnology, Inc. announced that it had dosed the first patient in one of three dose-expansion cohorts in its ongoing Phase 1 trial of VIR-5500. VIR-5500 is an investigational treatment for metastatic prostate cancer.
VIR-5500 is a type of therapy that redirects the immune system’s T-cells to attack cancer cells expressing the prostate-specific membrane antigen (PSMA). It leverages Vir’s proprietary PRO-XTEN dual-masked T-cell engager (TCE) technology. The “masking” component of the technology is designed to reduce the risk of cytokine release syndrome (CRS), which is a dangerous immune overreaction that typically limits how aggressively T-cell engagers can be dosed, according to Vir.
The company said the expansion cohort is now enrolling targets patients with late-line metastatic castration-resistant prostate cancer, or mCRPC. These are male patients whose disease has progressed despite multiple prior treatments. According to Vir, this is the most difficult-to-treat population in prostate cancer.
Vir said plans are in motion for two additional expansion cohorts. One cohort will trial VIR-5500 in combination with enzalutamide for early-line mCRPC. The other one will be a combination cohort for metastatic hormone-sensitive prostate cancer, or mHSPC. The company expects the first patient dosing in both cohorts over the coming months.
Vir claims VIR-5500 is currently the only dual-masked PSMA-targeting TCE in clinical evaluation, and this distinguishes the therapy from other PSMA-targeted agents already on or approaching the market.
Vir Biotechnology, Inc. is a clinical-stage biotechnology company. It develops antibody-based therapies designed to harness the immune system to treat infectious diseases and cancer. Its pipeline includes programs targeting chronic hepatitis delta, oncology therapies such as T-cell engagers for solid tumors, and early-stage efforts in HIV.
2. Zentalis Pharmaceuticals Inc (NASDAQ:ZNTL)
Number of Hedge Fund Holders: 22
Year-To-Date Performance: 271.85%
Market Capitalization: $356.07 million
Stock Upside: 64.34%
Zentalis Pharmaceuticals Inc (NASDAQ:ZNTL) is one of the must-buy small cap stocks to buy. On April 10, Jefferies raised its price target on Zentalis Pharmaceuticals Inc from $2.50 to $6.00 and left the Hold rating unchanged. This decision came after Zentalis said it had selected the optimal dose of its lead cancer drug azenosertib based on interim data from an ongoing clinical trial.
Zentalis announced in an April 9 press release that it had selected 400mg once daily on a five-days-on, two-days-off schedule as the optimal monotherapy dose of azenosertib for patients with Cyclin E1-positive platinum-resistant ovarian cancer. The company explained that this dose was arrived at after a prespecified interim data analysis from the DENALI Part 2a study.
Zentalis CEO Julie Eastland described the confirmation of azenosertib’s monotherapy dose as a pivotal milestone that puts the company firmly on track toward regulatory approval. She noted that the company is already moving beyond the clinical trials themselves. They are building out its commercial team, expanding manufacturing capacity, and developing the companion diagnostic needed to identify eligible patients.
With dose selection now confirmed, Jefferies is watching two near-term data points that could shift the story further. The first is Phase 2 efficacy data from the full DENALI trial, which Zentalis expects to share by year-end 2026. The second data point is the confirmatory Phase 3 study, ASPENOVA, which is on track to begin enrolling patients in Q2 2026.
Zentalis Pharmaceuticals Inc is a clinical-stage biotechnology company. It focuses on developing small-molecule therapies targeting key biological pathways in cancer. Its lead candidate is azenosertib, a WEE1 inhibitor currently in late-stage clinical development for ovarian cancer and other tumor types.
1. SunOpta, Inc. (NASDAQ:STKL)
Number of Hedge Fund Holders: 25
Year-To-Date Performance: 75.02%
Market Capitalization: $770.97 million
Stock Upside: 23.08%
SunOpta, Inc. (NASDAQ:STKL) is one of the must-buy small cap stocks to buy. On April 10, SunOpta, Inc. announced that the US Federal Trade Commission had granted early termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. The move allowed the company to clear a key regulatory hurdle in its proposed acquisition by Refresco Holding B.V.
The HSR clearance satisfies one of the required conditions for the deal to close, but the transaction is not yet complete. It still needs approval from SunOpta’s shareholders, a final order from the Ontario Superior Court of Justice, and clearance under any other applicable antitrust laws.
The acquisition itself became public on February 6, when Refresco had agreed to buy all outstanding shares of SunOpta for $6.50 per share in cash. This deal valued the Eden Prairie, Minnesota-based company at approximately $1.1 billion. Both companies’ boards unanimously approved the deal at the time.
On its part, Refresco said it wanted to acquire SunOpta to expand its plant-based beverages capabilities and strengthen its footprint in North America. The company is a global beverage solutions provider based in the Netherlands and is majority-owned by private equity firm KKR.
SunOpta expects the transaction to close in Q2 2026. In the meantime, the company has suspended its quarterly earnings calls and will not provide financial guidance for the duration of the pending deal.
SunOpta, Inc. is a consumer staples company. It manufactures and sells plant-based and fruit-based food and beverage products, including oat, almond, soy, and coconut-based drinks, as well as broths, teas, and fruit snacks.
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