We recently published a list of the 10 Best Rising Penny Stocks to Buy According to Analysts. In this article, we are going to take a look at where Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) stands against other best rising penny stocks to buy according to analysts.
Small-Cap Performance in Q1 2025
The start of 2025 was characterized by a series of challenges for the US equities across the board. Tariffs, inflationary concerns, the risk of recession, and loss of consumer confidence, all led to the small-cap Russell 2000 Index falling 9.5% and the large-cap Russell 1000 Index falling 4.5%. On April 1, Royce Investment released its fiscal first quarter outlook for small-cap stocks. Francis Gannon, who is the Co-Chief Investment Officer, and Managing Director, noted that while the large-cap outperformed the small-caps, however, this performance was not concentrated among the Magnificent Seven, which has dominated the market previously. This is evident from the fact that the Russell Top 50 Index fell 7.6%, whereas the NASDAQ Composite was down more than 10.3%.
Gannon highlighted that while the small-cap stocks underperformed the large caps, however, the divergence from the Mag Seven is a positive trend for the small-cap stocks. He noted that historically speaking the broadening of the market away from the top few stocks has meant good things for the small caps in the long term.
Moreover, while dissecting the performance of small-cap equities during the downturn, Gannon noted that the Russell 2000 Value Index held better as compared to the Russell 2000 Growth Index. The small-cap value stocks have outperformed the growth counterparts over 1 and 5-year comparisons. However, when looked up from a 10-year standpoint the performance for both categories remains the same. Gannon further pointed out that during the first quarter of 2025, the biggest detractors of the Index were Information Technology, Industrials, Health Care, and Consumer Discretionary, while Utilities was the only positive contributor.
Lasty, Gannon shared his experience of being a small-cap investment strategist for over 50 years. He highlighted it is still too early to tell if the first quarter drop for small-cap stocks was only short-term or indicates a long-term period of falling, however, he noted that corrections are common for the small-cap investors. Gannon advised investors to learn to be greedy when others are fearful and vice versa if they are interested in small caps. Moreover, looking at the stocks from a valuation standpoint, small caps remain largely undervalued as compared to large caps and Gannon advised the key to tackling periods of uncertainty is to remain invested.
Our Methodology
To compile the list of the 10 best-rising penny stocks to buy according to analysts, we used the Finviz stock screener and CNN. Using the screener, we aggregated the list of penny stocks (trading between $1 and $5) with more than 30% share price appreciation over the past month, and more than 30% average upside potential. Lastly, we sorted the list by market capitalization and ranked the stocks in ascending order of the number of hedge funds sourced from Insider Monkey’s Q4 2024 database. Please note that the data was collected on April 17, 2025.
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).
A family outdoors enjoying a camping trip, set against a backdrop of nature.
Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH)
Price: $1.49
1-Month Performance: 41.90%
Analyst Upside Potential: 101.34%
Number of Hedge Fund Holders: 22
Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) is a retailer of outdoor sports goods and caters to sports including hunting, shooting, reloading, camping, fishing, and other outdoor recreational activities. The company operates around 145 stores across 29 states in the US. On April 2, Craig-Hallum upgraded the stock from Hold to a Buy rating on the stock with a price target of $3. The firm based its upgrade on positive operational improvements including increase in comparable sales for fishing and camping during the fiscal fourth quarter of 2024. The firm believes that despite the pressures from inflation and consumer confidence the stock is undervalued.
Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) has been stabilizing its core business. During the fiscal fourth quarter of 2024, same-store sales of the company declined by only 0.5% on a 13-week basis, compared to the 12.8% decline last year. Moreover, the adjusted EBITDA increased from $5.3 million last year to $14.6 million in Q4 2024. Management noted that this reflects better margins, especially in the footwear category. Despite the market challenges coming from the inflationary market and recession fear, management expects to return to positive same-store sales growth during the current year for the first time since 2020. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) is one of the best-rising penny stocks to buy according to analysts.
Overall, SPWH ranks 5th on our list of best rising penny stocks to buy according to analysts. While we acknowledge the potential of SPWH to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SPWH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.