CNBC has <a href="https://www.cnbc.com/2024/12/25/cheap-small-cap-stocks-for-your-stocking-heading-into-2025.html?utm_source=in_materials">put forward</a> four small-cap stocks "for the stocking" going into 2025. These companies operate in different sectors but have a couple things in common: their shares have risen over 5% in the last month, yet they remain undervalued compared to their peers and have further upside, according to CNBC.

CNBC picks four small caps primed for growth next year

Fund managers at Royce, founded by <a href="https://kz.kursiv.media/2024-08-15/mrdr-royce/?utm_source=in_materials">Wall Street legend</a> <strong>Chuck Royce</strong> and known for specializing in small- and mid-cap stocks, have <a href="https://www.royceinvest.com/insights/2024/4Q24/whats-in-store-for-small-caps-in-2025?utm_source=in_materials">shared</a> investment ideas for 2025, including consumer durable names and discounters.

Royce reveals top small-cap investment ideas for 2025

Wedbush has initiated coverage of the "under-the-radar AI name" Innodata, rating it a "buy" with a target price 40% above the current market price. This gave a boost to Innodata stock, which jumped 16% before dropping almost 5% in premarket trading today, Friday, December 20.

Wedbush expects ‘under-the-radar AI name’ Innodata to surge 40% in 2025

Now might be the best time to buy small-cap stocks, <a href="https://www.cnbc.com/2024/12/16/tis-the-season-for-small-caps-starting-right-now-says-btig.html?utm_source=in_materials">according</a> to the investment firm BTIG. In December, the Russell 2000 index, which tracks this segment of the market, <a href="https://finance.yahoo.com/chart/%5ERUT?utm_source=in_materials#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">dropped</a> more than 8%. BTIG points out that historically the index tends to decline in the final month of the year before regaining momentum by mid-February.

BTIG says now is the time to buy small caps

Freedom Broker analysts have highlighted three small-cap stocks to watch as the so-called Santa Claus rally approaches. This is the <a href="https://get.investors.com/infographics/santa-claus-rally/?utm_source=in_materials">traditional rise</a> in stock prices before Christmas and into the early days of January. Among the highlighted companies is Perfect Corp., which is making AI solutions for the fashion and beauty sector.

Freedom Broker spotlights three small caps ahead of Santa Claus rally 

JPMorgan has revealed its top internet picks for 2025, which include both Big Tech names and small-cap stocks. As <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/12/42561047/amazon-meta-alphabet-spotify-lead-jpmorgans-2025-tech-picks-for-ai-potential?utm_source=in_materials">reported</a> in Benzinga, the bank believes that enhanced engineering efficiency, billions in AI revenue for Amazon Web Services and Google Cloud, and accelerated ad and search growth for Meta and Google, along with a pro-business political climate and stabilization of the economy, will bolster growth in the internet sector.

JPMorgan reveals top large- and small-cap internet picks for 2025

The Royce Smaller-Companies Growth Fund has <a href="https://www.royceinvest.com/insights/2024/4Q24/three-small-cap-growth-stories-in-payments-processing?utm_source=in_materials">spotlighted</a> three small-cap growth stories in payments processing. These companies started out several years ago when the industry was built around equipment sales. However, they successfully shifted their business models to generate recurring revenue while remaining committed to innovation, noted Royce portfolio manager <strong>Chip Skinner</strong>.

Royce looks at three innovators in the payments processing industry

Simply Wall St <a href="https://finance.yahoo.com/news/now-opportunity-miller-industries-inc-134949655.html?utm_source=in_materials">believes</a> Miller Industries is worth 50% more than its current share price, having set the highest target price on Wall Street at $105.3 per share. Meanwhile, Freedom Broker downgraded the name in early December, dropping their "buy" recommendation.

Simply Wall St says Miller Industries is 50% undervalued 

Barchart.com has <a href="https://www.barchart.com/story/news/30007594/why-wall-street-rates-these-2-russell-2000-stocks-a-strong-buy?utm_source=in_materials">highlighted</a> two stocks from the Russell 2000 small-cap index that are rated as "strong buys" by Wall Street analysts and feature significant upside.

Barchart.com highlights two Wall Street 'strong buys' from the Russell 2000 

The Russell 2000 small-cap index is expected to have a better 2025 than the S&amp;P 500, its large-cap counterpart, <a href="https://www.cnbc.com/2024/12/11/bull-market-to-continue-with-small-caps-on-top-piper-sandler.html?utm_source=in_materials">according</a> to an analyst at the investment bank Piper Sandler. Such an outperformance usually takes place in the third year of a bull market, which will come in 2025.

Piper Sandler sees the Russell 2000 outperforming the S&amp;P 500 in 2025

In a recent note, Zacks Small-Cap Research (Zacks SCR) laid out why it believes Lexaria Bioscience, a micro-cap company that is working on making popular weight-loss injections like Wegovy and Zepbound into pills using its patented technology, should be valued at $8 per share — 222% above the current market price. The company is set to begin a new phase of trials soon that may yield sufficient data to attract the attention of larger market players like Denmark’s Novo Nordisk, the maker of Wegovy, Zacks SCR notes.

Zacks sees 222% upside in weight-loss market innovator Lexaria Bioscience

has highlighted six small-cap stocks from the S&amp;P 600 index that it expects to keep rallying in 2025. They come from various sectors but have three common features: they have beat analyst earnings estimates in at least seven of the past eight quarters, along with at least 10% expected earnings growth in both 2025 and 2026, and a lower P/E ratio compared to the overall index.

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