We recently published a list of the Top 10 Small Cap Stocks to Buy with the Highest Upside Potential. In this article, we are going to take a look at where Wave Life Sciences Ltd. (NASDAQ:WVE) stands against other top small cap stocks to buy with the highest upside potential.
What Would 2025 Look Like for Small Cap Stocks?
On December 30, MJP Wealth Advisors chief investment officer Brian Vendig appeared on Yahoo! Finance’s Catalysts to discuss the potential outlook of small cap stocks in 2025. He said that as long as the economy stays stable and policy decisions are not taken to the extreme, small cap stocks could see the perfect environment to outperform in 2025. However, a little cooperation from the Fed is essential to maintaining this perfect environment.
He also believed that the market is likely to come back to earnings. Vendig explained that the market is expected to be choppy in the first few months of 2025. This trend is likely to materialize throughout the first half of 2025, with the choppiness attributed to policy uncertainties. But Vendig believed that if earnings remain intact, he will likely stay constructive on stocks. He even thinks that bonds might be a good opportunity as well. He said:
“I’m definitely not one to recommend to add to megacap tech at this point, but I think taking a look at some of those value-oriented sectors that help to play into innovation and growth for the economy still makes sense.”
He also highlighted that potential opportunities may emerge in the industrial sectors, such as infrastructure, electric grid enhancements, and power generation, along with some in pharmaceuticals and biotech.
Will the Fed and Incoming Trump Administration Bolster Small Cap Stocks?
Several other analysts have similar predictions as Vendig’s. On December 24, Global Advisors’ managing partner, Tom Lee, appeared on CNBC and highlighted the potential of small and mid-cap stocks in 2025, saying that this year will likely be a positive one for these companies. He reasoned that the incoming Trump administration and interest rate cuts are likely to make companies more expansionary, boosting their confidence regarding mergers. He even said that small caps may outperform by more than 100% in the coming years.
Our Methodology
We used the Finviz stock screener to compile a list of 30 small cap stocks. We then selected the top 10 stocks with the highest analyst upside potential as of January 9, 2025. We have also included the market capitalization of the stocks as of the same date. The list is sorted in ascending order of analysts’ average upside potential. These stocks are also popular among elite hedge funds as of fiscal Q3 2024.
Why do we care about what hedge funds do? 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Wave Life Sciences Ltd. (NASDAQ:WVE)
Analyst Upside: 71.67%
Market Cap: $1.96 billion
Number of Hedge Fund Holders: 34
Wave Life Sciences Ltd. (NASDAQ:WVE) is a clinical-stage biotechnology company that develops and commercializes ribonucleic acid (RNA) medicines through PRISM, a discovery and drug development platform. PRISM combines a deep understanding of human genetics with chemistry innovation and multiple modalities for scientific discoveries and breakthroughs that treat prevalent and rare disorders. It is developing treatments for obesity and other metabolic disorders, Duchenne muscular dystrophy, Huntington’s disease (HD), and alpha-1 antitrypsin deficiency.
Wave Life Sciences Ltd. (NASDAQ:WVE) also has collaboration agreements with GlaxoSmithKline, Takeda Pharmaceutical Company Limited, and Asuragen, Inc. for various research and development operations. It delivered three positive clinical data sets in 2024 and received supportive initial FDA feedback on Huntington’s Disease. The company is also rapidly advancing its obesity program towards the clinic and is strengthening its balance sheet to support its growing pipeline. As a result, it posted solid financial results in the third quarter of 2024, with revenue worth $7.7 million. It expects its future performance to be in line with its growth goals.
The company’s recent clinical programs are strongly supported by human genetics, have well-defined patient populations, and offer novel treatment approaches to collectively address around 10 million patients. Investors are bullish on the stock because of incoming positive data from trials, which also led the stock to gain around 135% over the past 12 months. Wave Life Sciences Ltd. (NASDAQ:WVE) expects to select candidates for its recent clinical programs in 2025.
Overall, WVE ranks 2nd on our list of top 10 small cap stocks to buy with the highest upside potential. While we acknowledge the potential of small cap stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WVE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.
