Morningstar has <a href="https://www.morningstar.com/funds/best-small-cap-etfs?utm_source=Twitter&amp;utm_medium=social&amp;utm_campaign=Morningstar.com_Content">spotlighted</a> five undervalued small-cap exchange-traded funds (ETFs) that offer attractive opportunities amid declining interest rates. At the same time, the investment research company urges investors to tread carefully and be selective.&nbsp;

Morningstar spotlights five undervalued small-cap ETFs 

Viomi Technology Co., Ltd

Zacks Small-Cap Research (Zacks SCR) <a href="https://s27.q4cdn.com/906368049/files/News/2025/Zacks_SCR_Research_02102025_VIOT_Lantier.pdf">thinks</a> Viomi Technology, a Chinese manufacturer of AI water filtration systems that is listed on the Nasdaq, has the potential to rise 150% versus current quotes. This comes against the backdrop of underperformance by Viomi shares since December, driven by concerns about Trump tariffs. In its report, Zacks SCR lays out why these concerns are overdone. Since publication, Viomi is up 11%.

Zacks says 150% upside for Chinese water filter maker Viomi

Kelly Services, Inc.

Analysts at Noble Capital Markets <a href="https://www.channelchek.com/company/kelya">value</a> small-cap recruiting company Kelly Services, one of the largest international staffing agencies, at $27 per share. That is nearly double its current market price. The company’s revenue for the fourth quarter of 2024 was in line with Wall Street expectations, while its adjusted EBITDA <a href="https://www.channelchek.com/news-channel/kelly-services-inc-kelya-solid-fourth-quarter-results">delivered</a> a beat.

Recruiter Kelly Services stock could double – Noble Capital Markets

DDC Enterprise Limited

Quotes on ready-to-eat food producer DayDayCook (DDC) <a href="https://www.marketwatch.com/investing/stock/ddc">jumped</a> more than 8% on Friday, February 14, after the company <a href="https://ir.daydaycook.com/news-events/press-releases/detail/28/ddc-enterprise-regains-nyse-listing-compliance">announced</a> it had regained compliance with one of its exchange’s listing standards. Still, the New York Stock Exchange (NYSE) discovered at least three violations last year.

Asian food maker DayDayCook gains as it regains NYSE compliance

It helps customers look for stolen cars, and it helps insurance companies track customers' driving habits.

How Ituran builds its business - exclusive interview

Papa John's International, Inc.

Shares of <a href="https://www.barrons.com/articles/papa-johns-stock-takeover-report-36ed2010?mod=RTA#:~:text=Papa%20John%27s%20%D0%B8%D1%81%D0%BF%D1%8B%D1%82%D1%8B%D0%B2%D0%B0%D0%B5%D1%82%20%D1%82%D1%80%D1%83%D0%B4%D0%BD%D0%BE%D1%81%D1%82%D0%B8%2C%20%D0%BF%D0%BE%D1%81%D0%BA%D0%BE%D0%BB%D1%8C%D0%BA%D1%83%20%D0%BF%D0%BE%D1%82%D1%80%D0%B5%D0%B1%D0%B8%D1%82%D0%B5%D0%BB%D0%B8%20%D1%81%D0%BE%D0%BA%D1%80%D0%B0%D1%89%D0%B0%D1%8E%D1%82%20%D1%80%D0%B0%D1%81%D1%85%D0%BE%D0%B4%D1%8B%20%D0%BD%D0%B0%20%D1%80%D0%B5%D1%81%D1%82%D0%BE%D1%80%D0%B0%D0%BD%D1%8B%20%D0%B8%D0%B7%2D%D0%B7%D0%B0%20%D0%B8%D0%BD%D1%84%D0%BB%D1%8F%D1%86%D0%B8%D0%BE%D0%BD%D0%BD%D0%BE%D0%B3%D0%BE%20%D0%B4%D0%B0%D0%B2%D0%BB%D0%B5%D0%BD%D0%B8%D1%8F.">struggling</a> pizza chain Papa John’s <a href="https://www.marketwatch.com/investing/stock/pzza">surged</a> more than 18% yesterday, February 13, following a Semafor <a href="https://www.semafor.com/article/02/13/2025/qatari-backed-investor-eyes-papa-johns-takeover">report</a> that the investment fund Irth Capital Management, backed by a member of the Qatari royal family, is considering taking the company private.

Qatari-backed fund looking at acquiring Papa John’s, stock soars

Shoals Technologies Group, Inc.

Beam Global

Sunrun Inc.

In the first hours of his presidency, Donald Trump launched a massive offensive against green energy. Among the affected industries are electric vehicles (EVs) and solar power. This has left small-cap investors in these sectors searching for answers as to which companies can survive the Trump barrage and even thrive and which cannot.

Trump vs. green energy: Where should small-cap investors look?

AeroVironment, Inc.

Shares of AeroVironment, a small-cap defense contractor that has been supplying munitions to Ukraine, <a href="https://www.marketwatch.com/investing/stock/avav">fell</a> 6.5% yesterday, February 12, after Donald Trump announced that he had agreed with Russia to start negotiations to stop the conflict in Ukraine. The company claims that it has growth prospects regardless of the outcome of these talks, and analysts largely recommend buying the stock.

Defense contractor AeroVironment slides on potential Ukraine peace talks

CoreCivic, Inc.

The Trump administration and new Congress are expected to crack down on illegal immigration, meaning much more demand for CoreCivic’s services. The company is seen as well positioned to meet it.

Private prison operator CoreCivic poised for record growth under Trump — Noble

SelectQuote, Inc.

Shares of small-cap SelectQuote, a distributor of Medicare insurance policies and operator of an expanding healthcare services platform, <a href="https://finance.yahoo.com/quote/SLQT/">jumped</a> 30% yesterday, February 11, to mark a three-year high. The trigger was the company’s <a href="https://ir.selectquote.com/news/news-details/2025/SelectQuote-Announces-350-Million-Strategic-Investment-from-Bain-Capital-Morgan-Stanley-Private-Credit-and-Newlight-Partners/default.aspx">announcement</a> of a $350 million strategic investment, the proceeds from which will be used for business expansion and debt refinancing.

Insurance distributor SelectQuote soars 30% after strategic investment

Archer Aviation Inc.

Joby Aviation, Inc.

Air taxi developer Archer Aviation has raised $300 million from major institutional investors, including funds managed by BlackRock, the world’s largest asset manager. Archer plans to use the proceeds to accelerate development of its hybrid aircraft platform for the defense market, a new area for the company, which has proven to be more promising than initially expected.

Air taxi developer Archer raises investment from BlackRock-managed funds

Eledon Pharmaceuticals, Inc.

Noble Capital Markets has <a href="https://www.channelchek.com/company/eldn">put out</a> a target price for Eledon Pharmaceuticals, a micro-cap maker of a drug to prevent transplant rejection, of $10 per share, more than double the stock’s <a href="https://www.marketwatch.com/investing/stock/eldn?mod=mw_quote_tab">current market value</a>. The Noble report <a href="https://www.channelchek.com/news-channel/eledon-pharmaceuticals-eldn-tegoprubart-used-in-pig-kidney-transplant-patient#:~:text=%D0%9C%D1%8B%20%D1%80%D0%B0%D1%81%D1%81%D0%BC%D0%B0%D1%82%D1%80%D0%B8%D0%B2%D0%B0%D0%B5%D0%BC%20%D1%8D%D1%82%D0%BE%D1%82%20%D0%B2%D1%8B%D0%B1%D0%BE%D1%80%20%D0%BA%D0%B0%D0%BA%20%D0%BF%D1%80%D0%B8%D0%B7%D0%BD%D0%B0%D0%BA%20%D1%82%D0%BE%D0%B3%D0%BE%2C%20%D1%87%D1%82%D0%BE%20%D0%B2%D1%80%D0%B0%D1%87%D0%B8%20%D1%81%D1%87%D0%B8%D1%82%D0%B0%D1%8E%D1%82%20%D0%B5%D0%B3%D0%BE%20%D0%BA%D0%BB%D0%B8%D0%BD%D0%B8%D1%87%D0%B5%D1%81%D0%BA%D0%B8%D0%B5%20%D0%B4%D0%B0%D0%BD%D0%BD%D1%8B%D0%B5%20%D1%83%D0%BB%D1%83%D1%87%D1%88%D0%B5%D0%BD%D0%B8%D0%B5%D0%BC%20%D0%BF%D0%BE%20%D1%81%D1%80%D0%B0%D0%B2%D0%BD%D0%B5%D0%BD%D0%B8%D1%8E%20%D1%81%20%D1%82%D0%B0%D0%BA%D1%80%D0%BE%D0%BB%D0%B8%D0%BC%D1%83%D1%81%D0%BE%D0%BC.">points out</a> that doctors recently selected Eledon’s experimental drug for use in a pig kidney transplant. Overall, if rejection issues are overcome, genetically modified animal organs could help address the shortage of donor organs.

Small caps