Top Small-Cap Stocks Shining in August 2025
Small-Cap Stocks Offer Growth Potential Amidst Higher Risk
In the world of investments, small-cap stocks have been making waves recently. A look at the performance of various small-cap companies over the past year reveals some impressive returns.
Microvast Holdings Inc (MVST) has seen a return of 634.58%, while Quantum Computing Inc (QUBT) has returned 2106.74%. Monopar Therapeutics Inc (MNPR) and Sezzle Inc (SEZL) have returned 1062.24% and 915.59% respectively. However, the title of the best-performing small-cap stock goes to Regencell Bioscience Holdings Ltd (RGC), with a return of an astonishing 5037.70%.
These returns are not limited to a few companies. A table (unfortunately, not provided due to formatting constraints) containing a list of the 21 best-performing small-cap stocks on major U.S. exchanges, ordered by one-year returns, further underscores this trend.
The Russell 2000 Index, the best-known gauge for small-cap stocks, houses these companies valued at $250 million to $2 billion. It's important to note that the definition of small when it comes to stocks is subjective, and other major indexes tracking small-cap stocks, such as the Standard & Poor's SmallCap 600 and the MSCI USA Small Cap Index, include U.S. companies with even broader ranges of market caps.
While small-cap stocks currently show lower short-term returns and higher risk compared to mid-cap and large-cap stocks, they offer potentially greater long-term growth and cyclical rebound opportunities. Over the long term since 2000, mid-cap stocks have slightly outperformed small caps and large caps, but small-cap stocks tend to perform better during the early stages of economic expansions and recessions.
Small caps are generally riskier than mid and large caps due to lower liquidity, wider bid-ask spreads, fewer analysts covering them, and higher volatility. They tend to be younger, less financially stable companies with less diversified business models, making them more vulnerable to economic shocks. On the other hand, large caps are more mature, financially solid, and benefit from institutional investor interest that helps stabilize prices in volatile markets.
Despite the risks, small caps may offer attractive opportunities if economic conditions favor early-cycle growth or if lower interest rates persist, potentially triggering a rebound for these riskier stocks. Mid-caps provide a balance between growth potential and stability, often outperforming both small and large caps over intermediate periods.
The current valuation gap between large- and small-cap stocks is the widest since the 1990s, with large caps trading at much higher price-to-book multiples, suggesting small caps may be undervalued relative to their large-cap peers. This could indicate potential for future outperformance if market conditions shift.
The performance of small-cap stocks in 2025 continues to be a topic of interest. While large caps have outperformed small caps this year, small caps' potential for growth in the long run remains a compelling argument for investors.
- An astute investor may glean insights from the impressive returns seen in small-cap stocks, such as Microvast Holdings Inc (MVST) and Regencell Bioscience Holdings Ltd (RGC), as they indicate substantial growth potential amidst higher risk in the world of finance.
- In light of the substantial returns and the current valuation gap between large- and small-cap stocks, utilizing an app designed for investing might provide invaluable opportunities to maximize wealth, as small caps may be undervalued compared to their large-cap counterparts.
- In the long term, small-cap stocks, with their potential for growth in the early stages of economic expansions and recessions, can offer greater long-term wealth creation for those who are willing to navigating the higher risks inherent in these investments.
