Top Small-Cap Stocks Exhibiting Outstanding Performance in August 2025
Small-cap stocks, known for their market values ranging between $250 million and $10 billion, have been underperforming their larger counterparts recently. However, these stocks present a unique opportunity for investors, as they exhibit a discounted valuation and a cyclical setup that could lead to strong future performance.
The Russell 2000 Index, the most well-known gauge for small-cap stocks, has a market cap ranging from about $240 million to $6 billion. Despite a representative small-cap portfolio rising about 2.7% in Q2 2025, significantly lagging the Russell 2000 Index rise of 8.5%, small caps have historically outperformed at the onset of economic expansions and during recessions. Given current economic uncertainties and a potential downturn, small caps may be poised for a rebound.
Small-cap valuations are deeply discounted relative to large caps, trading well below long-term averages. This discount could presage strong future returns when market sentiment shifts. Small/micro-cap value stocks have rebounded 57–74% historically after significant drawdowns.
However, the quality of small-cap stocks has declined, with a higher share (46%) of unprofitable companies compared to large caps (historically 27%). This has weighed on growth and overall returns, particularly post-IPO performance of venture-backed firms emphasizing growth over profitability.
Despite these challenges, there are exceptional performers among small caps with very high one-year returns. Some small-cap stocks have even exceeded 1000% in returns. The best-performing small-cap stock by one-year return is Regencell Bioscience Holdings Ltd (RGC), with a performance of 5037.70%. Other notable performers include Oncology Institute Inc (TOI) with a return of 590.74%, D-Wave Quantum Inc (QBTS) with a return of 1600.00%, Sezzle Inc (SEZL) with a return of 915.59%, and Aeluma Inc (ALMU) with a return of 595.16%.
In the first 10 months of the year, the value of small-cap stocks grew more than 10%. This growth was in part due to the Federal Reserve interest rate cut in September. The S&P 500 saw growth of more than 20% during the same time period, while small-cap stocks' growth lags behind.
Investors should be aware that small-cap stocks are generally more volatile and risky than large-cap stocks. However, the current discounted valuation and cyclical setup suggest a strategic opportunity to consider increased exposure to small caps during stabilization or early recovery phases. It's essential to carefully consider the quality of the companies being invested in, as a higher share of unprofitable companies within small caps presents a risk.
Here's a list of the 21 best-performing small-cap stocks, ordered by one-year returns, on major U.S. exchanges and with a market cap under $10 billion:
- Regencell Bioscience Holdings Ltd (RGC) - 5037.70%
- Monopar Therapeutics Inc (MNPR) - 1062.24%
- TSS Inc (TSSI) - 898.57%
- Tron Inc (TRON) - 659.62%
- Bright Minds Biosciences Inc (DRUG) - 2796.55%
- Biosig Technologies Inc (BSGM) - 969.88%
- Tecogen Inc (TGEN) - 1201.94%
- Exodus Movement Inc (EXOD) - 1304.95%
- United States Antimony Corp (UAMY) - 725.52%
- Neonode Inc (NEON) - 622.74%
- DeFi Development Corp (DFDV) - 1755.57%
- Arena Group Holdings Inc (AREN) - 619.26%
- Castellum Inc (CTM) - 646.27%
- Quantum Computing Inc (QUBT) - 2106.74%
- Rigetti Computing Inc (RGTI) - 1313.59%
- Nutex Health Inc (NUTX) - 955.94%
- DeFi Technologies Inc (DEFIT) - 1040.00%
- Mid-Cap Financial Inc (MIDR) - 847.15%
- Mid-America Apartment Communities Inc (MAA) - 70.10%
- Mid-Con Energy Partners LP (MCEP) - 340.77%
- Mid-Atlantic Health Services Inc (MAHS) - 116.67%
In conclusion, small-cap stocks present a unique opportunity for investors, with their discounted valuations and cyclical setup favorable for outperformance in early economic downturns or recoveries. However, investors face quality risks due to an influx of less profitable companies within small caps. It's essential to carefully consider the risks and rewards before investing in this asset class.
- The current discounted valuation of small-cap stocks presents a strategic opportunity for investors seeking insights into finance and investing, as a cyclical setup suggests strong future returns when market sentiment shifts.
- An app that provides in-depth analysis and predictions of small-cap stocks could help investors weigh the risks and rewards in this asset class, given the higher volatility and risk associated with small-cap stocks compared to large-cap stocks.
- Investors must be willing to delve deeper into the financial health of small-cap companies, as a higher share of unprofitable companies within small caps presents a significant risk to overall returns.
