On August 14, Jonathan Krinsky of BTIG, joined ‘Closing Bell’ on CNBC to discuss whether the recent rally in small cap stocks is sustainable. Krinsky drew a direct comparison of the current situation to that of July 2024, when small-cap stocks were trading flat year-to-date while the NASDAQ was experiencing a strong rally. At that time, a better-than-expected CPI report led to a belief that a September rate cut was impending, which caused the small caps to surge. Krinsky highlighted that 13 months later, the market was in a similar position: small caps were again flat year-to-date, the NASDAQ was performing well, and a recent CPI report had ignited a two-day rally in small caps, with a September rate cut now being fully priced in.
While acknowledging the current breakout, Krinsky questioned its sustainability and suggested that it might be just another momentum unwind similar to what happened in July of the previous year and after the recent election. He cautioned that the breakout needs to hold for more than just a day or two to be considered a lasting trend.
That being said, we’re here with a list of the 9 best small cap stocks with biggest upside potential.
A portfolio manager studying various stocks and other securities on a tablet.
Our Methodology
We first 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. We then selected the 9 stocks with an upside potential of over 30% as of August 15. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q1 2025, 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).
9 Best Small Cap Stocks with Biggest Upside Potential
9. Acadia Healthcare Company Inc. (NASDAQ:ACHC)
Market Capitalization as of August 15: $1.94 billion
Number of Hedge Fund Holders: 42
Average Upside Potential as of August 15: 31.08%
Acadia Healthcare Company Inc. (NASDAQ:ACHC) is one of the best small cap stocks with biggest upside potential. On August 13, RBC Capital analyst Ben Hendrix lowered the firm’s price target on Acadia Healthcare to $28 from $43, while keeping an Outperform rating on the shares after the company’s Q2 2025 results were announced.
Acadia Healthcare Company reported that its revenue increased by 9.2% year-over-year in Q2 to $869.2 million. This growth was driven by a 9.5% increase in same-facility revenue, which included a 7.5% rise in revenue per patient day and a 1.8% increase in patient days. While net income attributable to Acadia was $30.1 million, or $0.33 per diluted share, this figure was impacted by several one-time items.
Acadia added 101 new licensed beds to existing facilities in this quarter. This brought the total beds added in H1 to 479, which included 288 beds in newly constructed facilities. Additionally, Acadia added 4 new comprehensive treatment centers/CTCs, extending its network to 174 CTCs across 33 states and serving over 74,000 patients daily.
Acadia Healthcare Company Inc. (NASDAQ:ACHC) provides behavioral healthcare services in the US and Puerto Rico.
8. Travere Therapeutics Inc. (NASDAQ:TVTX)
Market Capitalization as of August 15: $1.68 billion
Number of Hedge Fund Holders: 42
Average Upside Potential as of August 15: 70.03%
Travere Therapeutics Inc. (NASDAQ:TVTX) is one of the best small cap stocks with biggest upside potential. On August 10, Citi raised the price target on Travere Therapeutics to $34 from $32, while maintaining a Buy rating on the shares. The firm sees meaningful potential upside for the shares with two near-term FDA action dates for Travere.
Before this decision, Travere Therapeutics reported its Q2 2025 financial results, with a revenue of $114.4 million, up from $54.1 million in Q2 2024. This was driven by a 165% year-over-year growth in US net product sales of FILSPARI, which reached $71.9 million. The company also received a $17.5 million milestone payment from its partner, CSL Vifor, during the quarter.
Earlier in May, the FDA accepted the company’s supplemental new drug application/sNDA for FILSPARI for the treatment of focal segmental glomerulosclerosis/FSGS, setting a PDUFA target action date of January 13, 2026. If approved, FILSPARI would be the first FDA-approved treatment for FSGS. Furthermore, the company expects a PDUFA action date of August 28 this year for its sNDA to modify the FILSPARI REMS (Risk Evaluation and Mitigation Strategy) program, which would remove the embryo-fetal toxicity monitoring requirement and reduce the frequency of liver monitoring.
Travere Therapeutics Inc. (NASDAQ:TVTX) is a biopharmaceutical company that identifies, develops, and delivers therapies to people living with rare kidney and metabolic diseases in the US.
7. Dyne Therapeutics Inc. (NASDAQ:DYN)
Market Capitalization as of August 15: $1.76 billion
Number of Hedge Fund Holders: 46
Average Upside Potential as of August 15: 91.16%
Dyne Therapeutics Inc. (NASDAQ:DYN) is one of the best small cap stocks with biggest upside potential. On August 4, Dyne Therapeutics announced that its investigational therapy, called DYNE-251, received Breakthrough Therapy Designation from the US FDA. This designation is for treating Duchenne muscular dystrophy/DMD patients whose condition is amenable to exon 51 skipping.
This marked the second such designation for the company, as its other lead program, called DYNE-101, also received the designation earlier in 2025 for myotonic dystrophy type 1/DM1. This designation is based on data from the ongoing DELIVER clinical trial. DYNE-251 has shown sustained functional improvements over 18 months, measured by key metrics like time to rise and stride velocity.
The therapy also demonstrated the production of near-full-length dystrophin protein. The FDA grants this designation to expedite the development and review of drugs for serious conditions that show preliminary evidence of a substantial improvement over existing treatments. The benefits for DYNE-251 include enhanced FDA support, early and frequent communication with reviewers, and eligibility for rolling and Priority Review, which could reduce the Biologics License Application/BLA review period from 12 to 8 months.
Dyne Therapeutics Inc. (NASDAQ:DYN) is a clinical-stage neuromuscular disease company that focuses on discovering and developing therapeutics for neuromuscular diseases in the US.
6. Arvinas Inc. (NASDAQ:ARVN)
Market Capitalization as of August 15: $520.53 million
Number of Hedge Fund Holders: 37
Average Upside Potential as of August 15: 97.46%
Arvinas Inc. (NASDAQ:ARVN) is one of the best small cap stocks with biggest upside potential. On August 8, Arvinas, in collaboration with Pfizer Inc. (NYSE:PFE), announced that the US FDA accepted its New Drug Application/NDA for vepdegestrant. The drug is intended to treat patients with estrogen receptor-positive/ER+, human epidermal growth factor receptor 2-negative/HER2-, ESR1-mutated advanced or metastatic breast cancer who have already received endocrine-based therapy.
The FDA has set a Prescription Drug User Fee Act/PDUFA action date of June 5, 2026. The NDA is based on data from the Phase 3 VERITAC-2 clinical trial, which showed a statistically significant and clinically meaningful improvement in median progression-free survival for vepdegestrant compared to fulvestrant. The trial enrolled 624 patients at 213 sites across 25 countries, with 270 of these patients having the ESR1 mutation.
The results from this trial were recently presented at the American Society of Clinical Oncology/ASCO 2025 Annual Meeting and published in The New England Journal of Medicine. Vepdegestrant is an investigational oral drug that functions as a PROteolysis TArgeting Chimera/PROTAC estrogen receptor degrader. This marks the first time a PROTAC has demonstrated a clinical benefit in breast cancer patients.
Arvinas Inc. (NASDAQ:ARVN) is a clinical-stage biotechnology company that engages in the discovery, development, and commercialization of therapies to degrade disease-causing proteins.
Pfizer Inc. (NYSE:PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the US and internationally.
5. Viridian Therapeutics Inc. (NASDAQ:VRDN)
Market Capitalization as of August 15: $1.51 billion
Number of Hedge Fund Holders: 40
Average Upside Potential as of August 15: 102.27%
Viridian Therapeutics Inc. (NASDAQ:VRDN) is one of the best small cap stocks with biggest upside potential. On July 30, Viridian Therapeutics announced an exclusive collaboration and licensing agreement with Kissei Pharmaceutical. The agreement grants Kissei the rights to develop and commercialize veligrotug and VRDN-003 in Japan.
Both of these molecules are anti-insulin-like growth factor-1 receptor/IGF-1R antibodies intended to treat Thyroid Eye Disease/TED, which is an autoimmune condition causing inflammation and damage to tissues around the eyes.
Under the terms of the agreement, Viridian will receive an upfront payment of $70 million from Kissei. In addition, Viridian is eligible to receive up to an additional $315 million in development, regulatory, and commercial milestone payments. The agreement also includes tiered royalties on net sales in Japan, with percentages ranging from the 20s to mid-30s. Kissei will be responsible for all associated development, regulatory, and commercialization costs and activities within Japan.
Viridian Therapeutics Inc. (NASDAQ:VRDN) discovers, develops, and commercializes treatments for serious and rare diseases.
4. Syndax Pharmaceuticals Inc. (NASDAQ:SNDX)
Market Capitalization as of August 15: $1.36 billion
Number of Hedge Fund Holders: 51
Average Upside Potential as of August 15: 122.36%
Syndax Pharmaceuticals Inc. (NASDAQ:SNDX) is one of the best small cap stocks with biggest upside potential. On August 5, BTIG analyst Justin Zelin raised the firm’s price target on Syndax to $56 from $43, while maintaining a Buy rating on the shares. The company delivered strong Q2 2025 results, with Revuforj and Niktimvo posting breakout commercial performance that exceeded internal and external expectations for Q2 and surpassed benchmarks set by precedent AML launches.
The company’s total revenue for the quarter was $38 million. This was comprised of $28.6 million in net product revenue from Revuforj, which was a 43% sequential increase, and $9.4 million in collaboration revenue from Niktimvo. Niktimvo, which is co-commercialized with Incyte, generated $36.2 million in net revenue during its first full quarter since its late January 2025 launch.
Syndax is advancing its pipeline and regulatory milestones. The US FDA granted Priority Review for the supplemental New Drug Application/sNDA for Revuforj to treat relapsed or refractory (R/R) mutant NPM1 acute myeloid leukemia/AML with a target action date of October 25 this year. If approved, it would be the first therapy for this indication. Additionally, the company is conducting multiple trials for both Revuforj and Niktimvo in new indications and in combination with other therapies.
Syndax Pharmaceuticals Inc. (NASDAQ:SNDX) is a commercial-stage biopharmaceutical company that develops therapies for the treatment of cancer.
3. Biohaven Ltd. (NYSE:BHVN)
Market Capitalization as of August 15: $1.66 billion
Number of Hedge Fund Holders: 37
Average Upside Potential as of August 15: 218.27%
Biohaven Ltd. (NYSE:BHVN) is one of the best small cap stocks with biggest upside potential. On August 12, Leerink lowered the firm’s price target on Biohaven to $50 from $60, while keeping an Outperform rating on the shares following the Q2 2025 earnings report and incremental updates on the pipeline.
Biohaven’s lead candidate, called VYGLXIA (troriluzole), is under review by the FDA for treating spinocerebellar ataxia/SCA, which is a rare, progressive, and fatal neurological disease. The firm also noted that the regulatory timeline for troriluzole in SCA was reaffirmed, with the PDUFA date still scheduled in Q4 this year, and the company is preparing for a potential commercial launch.
The company’s MoDE and TRAP degrader platforms are advancing, with BHV-1300 showing up to 87% IgG reductions in a Phase 1 study. Similarly, the TRAP degrader BHV-1400 demonstrated sustained reductions of over 80% in a key IgA Nephropathy biomarker.
Biohaven Ltd. (NYSE:BHVN) discovers, develops, and commercializes therapies for immunology, neuroscience, and oncology worldwide.
2. Janux Therapeutics Inc. (NASDAQ:JANX)
Market Capitalization as of August 15: $1.51 billion
Number of Hedge Fund Holders: 41
Average Upside Potential as of August 15: 218.60%
Janux Therapeutics Inc. (NASDAQ:JANX) is one of the best small cap stocks with biggest upside potential. On August 5, Janux Therapeutics announced a clinical milestone in its collaboration with Merck & Co. Inc. (NYSE:MRK), with the first patient being dosed in a lead program from their partnership. This achievement triggered a $10 million milestone payment to Janux.
The collaboration, which was established in December 2020, makes Janux eligible for additional development and commercial milestone payments, as well as royalties. Janux Therapeutics’ platforms are engineered to selectively modulate immune cells to fight cancer. A T cell engager is a type of bispecific antibody that brings T cells (a type of immune cell) and cancer cells into proximity, enabling the T cells to kill the cancer cells more effectively.
Janux’s technology is designed to overcome limitations of traditional T-cell engagers by being activated only within the tumor microenvironment, which aims to reduce toxicity and improve efficacy. Janux currently has two TRACTr candidates in Phase 1 clinical trials: JANX007, which targets prostate-specific membrane antigen/PSMA, and JANX008, which targets epidermal growth factor receptor/EGFR.
Janux Therapeutics Inc. (NASDAQ:JANX) is a clinical-stage biopharmaceutical company that develops immunotherapies based on Tumor Activated T Cell Engager/TRACTr and Tumor Activated Immunomodulator/TRACIr platforms technology to treat patients with cancer.
Merck & Co. Inc. (NYSE:MRK) is a healthcare company that operates through 2 segments: Pharmaceutical and Animal Health.
1. Structure Therapeutics Inc. (NASDAQ:GPCR)
Market Capitalization as of August 15: $1.16 billion
Number of Hedge Fund Holders: 41
Average Upside Potential as of August 15: 292.64%
Structure Therapeutics Inc. (NASDAQ:GPCR) is one of the best small cap stocks with biggest upside potential. On August 7, Guggenheim lowered the firm’s price target on Structure Therapeutics to $90 from $92, while keeping a Buy rating on the shares after the company reiterated that top-line data from the Phase 2b ACCESS and ACCESS II studies for oral small molecule GLP1RA aleniglipron are on track for concurrent year-end 2025 readouts.
As of June 30, the company reported a strong financial position with $786.5 million in cash, cash equivalents, and short-term investments, which are expected to fund operations and key clinical milestones through at least 2027. This includes planned and ongoing clinical trials for the company’s lead candidate, aleniglipron, but excludes future Phase 3 registrational studies.
Structure Therapeutics’ oral GLP-1 receptor agonist, called aleniglipron (GSBR-1290), remains on track for key data readouts. Topline 36-week data from the fully enrolled Phase 2b ACCESS (~220 adults) and ACCESS II (~80 adults) studies are expected by the end of 2025. These studies are evaluating doses up to 240 mg with a slow, four-week titration. In addition to these main trials, Structure Therapeutics has expanded the aleniglipron program with three new studies to support its competitive positioning and Phase 3 program design.
Structure Therapeutics Inc. (NASDAQ:GPCR) is a clinical-stage global biopharmaceutical company that develops and delivers novel oral small-molecule therapeutics to treat various chronic diseases with unmet medical needs in the US.
While we acknowledge the potential of GPCR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GPCR and that has 100x upside potential, check out our report about this cheapest AI stock.
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