Robert Teeter of Silvercrest Asset Management recently appeared in an interview to express that he thinks small-cap stocks are currently facing a choppy market, but he also acknowledged that he anticipates a rally later in the year. Based on this sentiment, he advised clients on the importance of diversification within the S&P 500 and pointed to opportunities in international markets. We covered his stance in greater detail in one of our other articles, 10 Best Small-Cap Value Stocks to Buy Now. Here’s an excerpt from it:
“He noted that the Trump trade initially boosted small caps due to expectations of economic acceleration and lower interest rates, both of which are favorable for these companies. However, policy uncertainty and weaker-than-expected economic data have delayed their rally. Teeter believes that small caps will come into their own later in the year, but for now, they are facing a choppy market with significant rotation.”
However, later on March 26, Villere & Co. Portfolio Manager George Young joined ‘Market Domination Overtime’ on Yahoo Finance to discuss why investors should be looking at small-cap stocks. George Young stated that small caps currently appear cheap and have been underperforming relative to larger stocks. He highlighted that small-cap stocks have been inexpensive for a while. To support his stance, he pointed out that last year, the S&P 500 rose about 25%, while small-cap stocks increased by only 11%. He explained that this disparity suggests a regression to the mean at some point, which means that the valuation gap between small caps and large caps should eventually narrow. Young also noted a shift in market dynamics during Q1 of this year. While the S&P 500 was down ~2% then, the S&P 500 excluding the MAG7 stocks was actually up ~2%. He described this change as a relatively usual once, since stock market leadership often rotates between sectors and types of stocks. Young particularly favored the small-cap sector when questioned about long-term and steady investments.
That being said, we’re here with a list of the 11 most promising small-cap stocks according to analysts.
A close-up of an organized portfolio board, monitoring the performance of a diverse array of stocks.
Our Methodology
We 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, and that had the highest upside potential (at least 40%). The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, 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).
11 Most Promising Small-Cap Stocks According to Analysts
11. Tripadvisor Inc. (NASDAQ:TRIP)
Market Capitalization as of April 23: $1.74 billion
Number of Hedge Fund Holders: 40
Average Upside Potential as of April 23: 45.63%
TripAdvisor Inc. (NASDAQ:TRIP) is an online travel company that offers travel guidance products and services. It operates through three segments: Brand TripAdvisor, Viator, and TheFork. The Viator segment operates an online marketplace that connects travelers to discover and book tours, activities, and attractions from experience operators.
Viator’s Gross Booking Value (GBV) reached ~$4.2 billion in 2024. Viator achieved revenue growth of 14% for the full year, which accelerated to 16% in Q4 to make $186 million. Notably, direct booking volume on the Viator platform grew by ~30% for the full year, which was supported by marketing efficiency and investments in the consumer-facing product for boosting conversion and customer loyalty.
Viator’s mobile app also emerged as its fastest-growing channel, with booking volume surging by over 80% for 2024. Viator expanded its network and added more than 15% to the number of operators on its platform in this period. TripAdvisor Inc.’s (NASDAQ:TRIP) focus for Viator in 2025 centers on enhancing conversion and loyalty. For Q1 2025, Viator projects booking volume growth of 14% to 16% and revenue growth of 9% to 11%.
10. Madison Square Garden Entertainment Corp. (NYSE:MSGE)
Market Capitalization as of April 23: $1.49 billion
Number of Hedge Fund Holders: 46
Average Upside Potential as of April 23: 46.02%
Madison Square Garden Entertainment Corp. (NYSE:MSGE) engages in the live entertainment business. It produces, presents, and hosts live entertainment events, such as concerts, sporting events, family shows, family shows, performing arts events, and special events. It also operates a collection of venues, such as Madison Square Garden and The Theater at Madison Square Garden.
The Christmas Spectacular segment is a record-revenue-generating holiday show that boosted Madison Square’s FQ2 2025 performance through high ticket sales and per-guest spending. In its 91st season, the show achieved record-setting results across numerous metrics and made over $170 million in total revenue, which was a new high for the production. This was fueled by the sale of ~1.1 million tickets across 200 performances, which marked the show’s strongest sell-through rate in 25 years.
The show also experienced year-over-year growth in average ticket yields for both individual and group sales due to strategic pricing. Guggenheim analysts reaffirmed their Buy rating on Madison Square Garden Entertainment Corp. (NYSE:MSGE) with a $48 price target. Despite recent headwinds on the stock’s performance, the analysts believe that Madison Square will still generate ~double-digit growth in adjusted operating income (AOI) for 2025.
Ariel Fund stated the following regarding Madison Square Garden Entertainment Corp. (NYSE:MSGE) in its first quarter 2024 investor letter, highlighting the company’s strong earnings beat:
“Additionally, Madison Square Garden Entertainment Corp. (NYSE:MSGE), shares advanced in the quarter following a robust earnings beat, driven by an increase in the number of concerts held at MSGE’s venues, strong demand for the Christmas Spectacular and higher per-event revenues. Notably, management raised full year 2024 guidance and reiterated its outlook to achieve a low-double-digit percentage increase in event bookings. With marquee assets such as New York’s Madison Square Garden, Radio City Music Hall, Beacon Theatre and The Chicago Theater, we believe MSGE is well positioned to capitalize on strong demand for live entertainment. In our view, MSGE’s assets generate stable cash flow that should enable deleveraging. At current levels, the company is trading at a significant discount to our estimate of private market value.”
