The market has started to favor smaller companies in 2025, and stocks between $1 billion and $5 billion in market value are attracting renewed interest. These stocks had a forgettable stretch over the past few years, but investors now see evidence that underperformance among mid-cap and small-cap names could end soon.
The S&P MidCap 400 and S&P 600 indexes still trail large caps by a wide margin, yet smaller firms have held up well even as interest rates remain elevated. The valuation gap between these groups and the biggest names in the market has also widened to levels that analysts consider unusually attractive.
Investors now expect momentum to build for select companies in this sweet spot, and many of them are in fast-growing industries with strong fundamentals. Let’s look at the 15 standout names that have caught Wall Street’s attention so far in 2025.
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Methodology
For this article, I screened the top-performing stocks year-to-date in the $1 billion to $5 billion market capitalization bracket. Stocks that I have covered this week will be excluded from this list.
I will also mention the number of hedge fund investors for these stocks. Why are we interested in the stocks that hedge funds invest in? 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).
15. Schrodinger (NASDAQ:SDGR)
Number of Hedge Fund Holders In Q3 2024: 17
Schrodinger (NASDAQ:SDGR) is a software company that makes physics-based computational methods and helps with drug discovery.
The stock is up significantly this year due to the announcement of an expanded collaboration with Novartis that includes a $150 million upfront payment and the potential for up to $2.3 billion in milestone payments. Schrodinger could also get $150 million in the first quarter of 2025.
It has added new targets to its agreements with Otsuka and secured more funding from the Bill & Melinda Gates Foundation for predictive toxicology.
Total revenue for Q3 2024 came in at $35.3 million, and software revenue came in at $31 million. It lowered its drug discovery revenue forecast for 2024, but it has continued to report double-digit increases in subscription-based software revenue. Schrodinger’s operating expenses rose to $86.2 million, and it posted a net loss of $38.1 million.
The consensus price target on this stock is $28.5, implying 17% upside.
SDGR stock is up 19.3% year-to-date.
14. Centrus Energy (NYSEAMERICAN:LEU)
Number of Hedge Fund Holders In Q3 2024: 11
Centrus Energy (NYSEAMERICAN:LEU) supplies nuclear fuel for the nuclear power industry. The recent “Stargate” announcement by Trump is a major reason why these stocks have been spiking since AI models are going to need a lot of energy, and the sort of energy they need can’t be fully met by the current legacy power infrastructure. This company is the first in the U.S. to produce High-Assay Low-Enriched Uranium (HALEU).
Centrus Energy has landed several contracts with the Department of Energy (DOE), and the funding could reach billions. It also has a $3.8 billion backlog.
In Q3 2024, the company posted $57.7 million in revenue, though the net loss was $5 million. Last year, the company did achieve profitability. It posted a net income of $84.4 million and revenue of $320.2 million.
The current consensus price target by Wall Street sits at $106, implying 16% upside from here.
The stock is up 22.5% year-to-date.