On February 14, Stacey Sears, portfolio manager at Emerald Advisors, joined ‘Squawk Box’ on CNBC to share her insights on the market’s performance in early February. She thinks that small-cap earnings data is encouraging. Despite various news events, which include inflation data and tariff announcements, she thinks that the market has handled the developments well. Michael Hartnett of Bank of America suggests that the recent hot CPI could be a blessing in disguise as it might lead President Trump to adopt more cautious policies regarding tariffs and immigration. But Sears emphasized that her team is not overly concerned about inflation levels at present. They believe that while there has been an uptick in some inflation indicators like PPI elements, these don’t significantly impact Personal Consumption Expenditures (PCE), which is a focus for Fed Chair Jerome Powell.
In terms of positioning within this environment, Sears discussed how small-cap stocks are showing encouraging signs after being in an earnings recession for much of the past two years. The fourth quarter marked a turn with positive year-over-year earnings growth exceeding expectations, tracking at high single digits instead of the anticipated 2% growth. This outperformance spans multiple sectors including financials, healthcare, and technology. She was questioned about small caps being less appealing during periods of high inflation and interest rates due to their volatility compared to larger cap stocks like those in mega-cap indices reaching peak concentration levels. Sears pointed out that small caps are currently undervalued relative to their historical norms within equity markets. She believes structural changes are unlikely and anticipates recovery as domestic economic strength continues with GDP tracking positively according to Atlanta Fed data. Moreover, borrowing costs have decreased recently by about 100 basis points based on secure overnight financing rates (SOFR), which should alleviate some headwinds affecting earnings growth for small caps.
Given these factors combined with favorable valuations today, Sears sees opportunities emerging within small caps. That is why we’re here with a list of the 12 best-performing small-cap stocks so far in 2025.
Phone with stocks chart
Methodology
We used the Finviz stock screener to compile a list of the best-performing stocks that were trading between $300 million and $2 billion. We then picked the top 12 stocks with the highest year-to-date gains, as of February 17. The stocks are ranked in ascending order of their year-to-date performance. We have also added the hedge fund sentiment for each stock 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).
12 Best Performing Small Cap Stocks So Far in 2025
12. Centrus Energy Corp. (NYSEAMERICAN:LEU)
Number of Hedge Fund Holders: 11
Year-to-Date Performance as of February 17: 71.13%
Centrus Energy Corp. (NYSEAMERICAN:LEU) provides nuclear fuel components to power plants in the US and internationally. Operating through its Low-Enriched Uranium (LEU) and Technical Solutions segments, it supplies enriched uranium products and related services to utilities and other customers.
Its LEU segment is its revenue powerhouse, generating $349.9 million in 2024, which was a jump from the previous year. It secured a massive $2.8 billion LEU backlog in this period, which showed strong customer demand. This is further supported by its overall backlog of $3.8 billion. The company’s focus on expanding LEU production in Piketon, Ohio will drive future growth. It has also secured government contracts that are aimed at reducing US reliance on foreign uranium, which is backed by billions in congressional funding.
This company possesses the only US-made centrifuge technology and a critical NRC (Nuclear Regulatory Commission) license. This is important given the rise of AI. The massive energy consumption that AI requires pushes the US to secure its energy grid and become less dependent on foreign energy sources. The recent Stargate announcement highlights the need for more energy production to power future AI models. This announcement refers to a massive AI infrastructure build. To capitalize on this opportunity, Centrus Energy Corp. (NYSEAMERICAN:LEU) is investing heavily in manufacturing and supply chain resilience.
The company is also the first in the US to produce High-Assay Low-Enriched Uranium (HALEU). With limited nuclear sites and the rising demand from tech companies, and also from the US government, the nuclear energy sector is expected to see an increase in value.
11. Oppfi Inc. (NYSE:OPFI)
Number of Hedge Fund Holders: 15
Year-to-Date Performance as of February 17: 71.15%
Oppfi Inc. (NYSE:OPFI) is a tech-enabled lending platform that partners with community banks to expand credit access to underserved Americans. It focuses on responsible lending and financial inclusion to help customers build financial health.
Its lending business helped it make a record revenue of $136.6 million in Q3 2024. This was due to higher loan yields and a focus on lending to existing, lower-risk customers. This improved credit performance, which then resulted in lower charge-off rates and increased profitability. The company also slashed expenses through automation and disciplined spending, which boosted profit margins. This led to a net income of $28.8 million compared to $13.3 million for the same period last year. It’s focusing on refining its loan products and integrating AI. Its digital platform, advanced analytics, bank partner model, and multi-channel marketing solidify its competitive edge.
The company’s performance is supported by positive earnings surprises and upward revisions in earnings estimates. It now anticipates earnings per share of $0.85 to $0.87 compared to the previous range of $0.73 to $0.75, for the full year 2024. Oppfi Inc. (NYSE:OPFI) has consistently beaten earnings expectations, and analysts are projecting continued growth. In Q3 alone, its earnings were $0.33 per share compared to $0.16 in Q3 2023. This momentum shows that the stock’s surge will likely continue.
Hedge Fund Resource Center