Small-Cap Stocks Outlook for 2025
As we dive into the new year, it’s essential to understand the trends and predictions that will shape the stock market. In this article, we’ll explore the potential of small-cap stocks in 2025 and analyze their performance in comparison to other investment options.
Tom Lee’s Prediction
On December 24, Global Advisors’ managing partner, Tom Lee, shared his thoughts on the potential of small and mid-cap stocks in 2025. According to Lee, 2025 is expected to be a good year for small and mid-cap stocks, driven by interest rate cuts and the incoming administration. Companies will feel confident about mergers and expansions, leading to increased growth.
New Street Advisors’ CEO Delano Saporu’s View
Similarly, New Street Advisors’ CEO Delano Saporu believes that small-cap stocks are well-positioned to outperform in 2025. The economy has shown resilience in 2024, particularly in the last quarter, indicating a promising outlook for businesses. Donald Trump’s win has already driven significant gains in small-cap stocks amid growing enthusiasm around potential regulatory easing.
Why Small-Cap Stocks Are a Good Choice
Small-cap stocks are conventionally focused on the domestic market with less exposure to international trade compared to large-cap counterparts. Therefore, Trump’s tariff policies will have a minor impact on small-cap stocks compared to large-cap stocks.
US Stock Market Performance in 2024
The US stock market has delivered impressive gains for two consecutive years, with the S&P 500 index surging more than 25% in 2024. The tech-heavy Nasdaq 100 jumped up to 28%, while the Russell 2000 index and the Dow Jones U.S. Small-Cap Index rose by over 15% and 18%, respectively.
Torsten Slok’s Economic Outlook
Apollo Global Management (APO) economist Torsten Slok released his 2025 economic outlook for the US. According to Slok, the US economy will deliver strong results with no signs of major slowing in 2025. Interest rates are expected to stay ‘higher for longer’ despite the Fed’s current interest rate-cutting cycle.
GDP Growth and Labor Market Performance
The US economy is expected to register GDP growth of 2.2% in 2025, driven by less restrictive monetary policy, resilient consumer spending, and a steadying labor market.
Why Elevation Oncology, Inc. (NASDAQ:ELEV) Stands Out Among Penny Stocks
As we explore the top penny stocks to invest in according to media, let’s take a closer look at Elevation Oncology, Inc. (NASDAQ:ELEV), which ranks 11th on our list.
Why Hedge Funds Matter
Our methodology involves gathering over 50 penny stocks from financial media websites and selecting the top 12 penny stocks that were most widely held by hedge funds as of Q3 2024. We care about what hedge funds do because our research has shown that imitating their top stock picks can lead to outperformance.
Elevation Oncology, Inc. (NASDAQ:ELEV)
- Share Price (As of January 3): $0.66
- Number of Hedge Fund Holders: 16
Elevation Oncology, Inc. is a US-based oncology company that develops targeted therapeutics for cancer treatment. The company’s specialty lies in selective cancer therapies to treat patients across various solid tumors.
EO-3021 and Poziotinib
The company is currently developing its lead product, EO-3021, which has shown promising results in initial research phases. Additionally, Elevation Oncology has nominated poziotinib for FDA approval, which could become a unique treatment for bladder cancer.
Why We’re Skeptical of ELEV’s Potential
While we acknowledge the potential of ELEV to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns within a shorter time frame. If you’re looking for an AI stock with less than 5 times earnings, check out our report on the cheapest AI stock.
Conclusion
In conclusion, small-cap stocks are expected to perform well in 2025 due to interest rate cuts and regulatory easing. Elevation Oncology, Inc. (NASDAQ:ELEV) is a promising penny stock with potential growth opportunities, but we remain skeptical of its ability to deliver higher returns compared to AI stocks.
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This article was originally published at Insider Monkey.