7 Top Small-Cap Stocks to Watch in 2025

Some traders just aren’t interested in small-cap stocks … and they could be missing out.

These companies may not be household names, but there’s a lot of potential in some of them.  

The year’s been off to a hot start. We’ve seen many small caps in hot sectors break out. 

Electric vehicles, e-sports, 3D printing, stay-at-home plays — there are so many sectors with breakout potential. I keep tabs on it all and send out a weekly watchlist. Sign up to get my picks in your inbox every Sunday for no cost!

Read on to find out about seven small-cap stocks worth watching in 2024 and why I think they could be on their way to breaking out. I’ll also answer some frequently asked questions about small caps. Let’s go.

Small-Cap Stocks: Definition

A small-cap stock is a stock with a market capitalization between $100 million and $2 billion.

Market capitalization — market cap — is the value of a company’s outstanding shares. It’s calculated by multiplying the share price by the number of shares.

What Is Considered a Small-Cap Stock?

Any stock with a market cap of less than $2 billion could be considered a small-cap stock. It doesn’t matter what sector the company’s in.

Characteristics of a Small-Cap Stock

Small-cap stocks are mostly smaller, up-and-coming companies. Some are penny stocks. 

These stocks usually have lower liquidity than larger-cap stocks. They’re also considerably more volatile. That means trading them can be riskier.

But there’s also more growth potential and a greater chance for big moves. That’s what makes them attractive to traders.

Why Should You Trade Small-Cap Stocks? 

Trading small-cap stocks can be riskier than trading well-established stocks. Make sure a small-cap stock fits in with your trading goals, and that you understand the risk and have a solid trading plan.

If you’re a high risk/high reward kind of trader, then trading small-cap stocks might be for you. But make sure you have a good trading plan with an entry/exit strategy — and stick to it.  Do your research.

Small-Cap Companies

Small-cap companies may have good growth potential … But because they can be risky, it’s important to find out as much as you can about them. Do your research. Check their website. 

What does their financial performance look like? Have there been any management changes? Do their press releases have real news, or are they just fluff? Do you see any red flags?

Some of these companies won’t have the greatest financials or earning reports. That’s OK — as long as you have a plan to trade them. That means setting reasonable goals while setting levels for your risk. These stocks tend to be better for day trading. Make sure you’re prepared.

7 Top Small-Cap Stocks to Watch in 2025

My top small-cap stocks to watch for 2025 are:

• NASDAQ: PSTV — Plus Therapeutics Inc — The Biotech Spiker With the Rare FDA Designation
• NASDAQ: APLD — Applied Digital Corp — The AI Penny Stock That NVIDIA Is Still Invested In
• NASDAQ: TRNR — Interactive Strength Inc. — The Fitness Penny Stock With Acquisition News
• NASDAQ: MARA — Marathon Digital Holdings Inc. — The Bitcoin Miner Betting Big on AI
• AMEX: KULR — KULR Technology Group Inc. — The EV Penny Stock With a Side Of Bitcoin Volatility
• NASDAQ: RGTI — Rigetti Computing Inc. – The Quantum Leader With a Big Partnership
• NASDAQ: QUBT — Quantum Computing Inc. — The Quantum Stock Traders Love to Hate

I’m not holding any long-term positions in these tickers. I’m just watching these stocks. This is one of many watchlists I maintain…

Sign up here to get my weekly watchlist each Sunday!

There’s no guarantee that any of my watchlist picks will be tradeable. But if something happens, smart traders should be ready.

Here’s some background info on small-cap stocks:

• What is the most promising small-cap penny stock?

A stock with a lot of volatility like Interactive Strength Inc (NASDAQ: TRNR) is a good bet for the most promising small-cap penny stock. Remember, we’re traders, not investors. We’re watching the stocks on this list for short-term moves, not predicting which of these stocks will still be around in 2030.

• What are the top 3 small-cap penny stocks to buy now?

My top 3 small-cap penny stocks to buy now (as long as their price action is strong) are Interactive Strength Inc (NASDAQ: TRNR), Applied Digital Corp (NASDAQ: APLD), and Rigetti Computing Inc (NASDAQ: RGTI).

• Which small-cap penny stocks have a “Strong Buy” analyst rating?

Analysts don’t give any small-cap penny stocks “strong buy” ratings. These stocks are sketchy and unstable — you should never “invest” in them. Always trade with a plan.

Let’s get to the picks …

Best Small-Cap Stocks for 2025

These are my top small-cap stocks to watch in 2025…

They have a chance to catch fire…

Watch them — and don’t get burned!

Plus Therapeutics Inc (NASDAQ: PSTV) — The Biotech Spiker With the Rare FDA Designation

My first small-cap penny stock pick is Plus Therapeutics Inc (NASDAQ: PSTV).

On March 6 during premarket hours, PSTV announced that it was granted F.D.A. drug designation for its treatment of lung cancer.

That’s big news for a penny stock! The involvement of an official agency, like the F.D.A., shows legitimacy for an otherwise trashy company.

The stock spiked 550%* in less than two days … 

The extreme volatility of this stock is also attributable to the low share count in the float.

StocksToTrade shows that the float is only 5.7 million shares. That’s below our day trading goal of 10 million shares or fewer. The low supply of shares will help prices spike higher when demand increases.

There’s no telling how high this penny stock could spike with a 5 million share float.

Applied Digital Corp (NASDAQ: APLD) — The AI Penny Stock That NVIDIA Is Still Invested In

My second small-cap penny stock pick is Applied Digital Corp (NASDAQ: APLD).

On September 5, 2024, APLD started moving with news that NVIDIA (among other investors) bought a stake in the stock.

We’ve seen NVIDIA investments act as strong catalysts before … 

• Serve Robotics Inc. (NASDAQ: SERV)
• SoundHound AI Inc. (NASDAQ: SOUN)

NVDA is still arguably the most popular AI stock in the U.S. market.

It holds a $3 trillion valuation. And it’s positioned to continue its dominance in the microchip industry.

Penny stocks like APLD have a lot to gain from NVIDIA’s investment announcements.

APLD was trading under $4 in September 2024, before the market learned of the NVIDIA investment.

Share prices reached $12 a few months later, on February 21, 2025. It spiked 280%* in total.

The price fell from those highs in late February, but NVIDIA is still holding onto APLD shares. 

That bullish sentiment means that we could see a rally from this stock in March.

Interactive Strength Inc. (NASDAQ: TRNR) — The Fitness Penny Stock With Acquisition News

My third small-cap penny stock pick is Interactive Strength Inc. (NASDAQ: TRNR).

This isn’t just another random penny stock. TRNR made waves with news of its planned acquisition of Sportstech, a fitness equipment company with a solid footprint in Europe. Traders love a good acquisition story — especially when it comes with raised revenue guidance for the year. The company’s now targeting $50 million in revenue for 2025, which is a big step up for a stock that was basically off the radar a month ago.

The big spike came after the deal was announced, but now we’re watching to see if TRNR can actually hold the gains and start to build a real trend. I like the ambition here — but ambition doesn’t pay bills. Execution does. If TRNR starts slipping back toward pre-news levels, this could turn into just another overhyped runner that gave it all back.

For now, I’m watching for signs that it can hold higher lows and attract real volume — not just short-term momentum traders piling in and out. If the deal closes and we see some actual numbers to back up the hype, this could stay interesting.

Marathon Digital Holdings Inc. (NASDAQ: MARA) — The Bitcoin Miner Betting Big on AI

My fourth small-cap penny stock pick is Marathon Digital Holdings Inc. (NASDAQ: MARA).

Next up is Marathon Digital Holdings Inc. (NASDAQ: MARA), one of the most well-known crypto stocks on the market.

MARA crushed earnings — no other way to say it. Revenue jumped 37%, Bitcoin production is still strong, and the company stacked 18,146 new Bitcoin onto its balance sheet in Q4 alone. That’s a serious pile of digital gold.

But here’s the real twist — MARA isn’t just mining Bitcoin anymore. Management is talking up plans to become the infrastructure layer for AI inference — essentially positioning their data centers to handle the massive computing power AI apps require. It’s an ambitious pivot, but it makes sense. AI and Bitcoin both rely on serious hardware, and MARA wants to monetize that capacity every way they can.

Check out my full AI penny stocks watchlist here!

The stock popped after earnings, and with Bitcoin pushing toward all-time highs, MARA has wind at its back. That said, Bitcoin miners are notoriously volatile, and this one loves to give back gains when the broader market pulls back.

For now, I’m watching to see if MARA can hold its post-earnings spike and build a higher base. If Bitcoin breaks out again, MARA could ride the wave. If Bitcoin stalls, this thing could easily fade. It’s a classic sector-sympathy trade — just with more headlines.

KULR Technology Group Inc. (AMEX: KULR) — The EV Penny Stock With a Side Of Bitcoin Volatility

My fifth small-cap penny stock pick is KULR Technology Group Inc. (AMEX: KULR).

KULR is your typical shifty penny stock. Officially, they’re in the thermal management business, making cooling tech for batteries and high-performance electronics…

But lately? KULR’s been acting more like a Bitcoin holding company. They’ve been selling stock like crazy, using the proceeds to buy Bitcoin for their corporate treasury. That strategy worked wonders for MicroStrategy (NASDAQ: MSTR) — but KULR is no MicroStrategy.

Traders are watching KULR because of the combination of speculative buzz and actual partnerships — like the deal they signed with Worksport to enhance battery tech and US manufacturing. They’ve also got an AI cooling partnership in Taiwan with EDOM Technology. That’s enough to keep this on the radar.

But if Bitcoin pulls back — or if KULR keeps flooding the market with new shares — this could unravel fast. For now, I’m treating this like a momentum play with a side of Bitcoin volatility. It’s not an investment. It’s a trade — and a risky one at that.

Rigetti Computing (NASDAQ: RGTI) – The Quantum Leader With a Big Partnership

My sixth small-cap penny stock is Rigetti Computing (NASDAQ: RGTI).

The Nvidia GTC conference just wrapped up, and as expected, CEO Jensen Huang’s comments sent shockwaves through the AI and quantum computing sectors. Traders hoping for a bullish push on quantum computing stocks got the opposite—Huang cast more doubt on the space, triggering another sell-off.

Quantum stocks got crushed. D-Wave Quantum (QBTS) dropped 21%, Quantum Computing Inc. (QUBT) fell 14%, Rigetti Computing (RGTI) lost 11%, and IONQ (IONQ) sank 9%. Huang’s offhand remark—“I didn’t know they were public. How can a quantum company be public?”—was all it took to spook traders.

This was a continuation of the biggest voice in quantum and AI spaces taking the air out of room. Back in January, he warned that “very useful” quantum computers are likely decades away…

Now, at GTC, he reinforced that skepticism, causing another wave of selling.

None of this cancels out the fact that RGTI has a strong catalyst—its new partnership with Taiwan-based Quanta Computer, a $43 billion hardware manufacturing giant.

Check out the latest RGTI news here!

Quanta is investing $35 million in Rigetti, with $500 million dedicated to an overall quantum development pipeline. RGTI is on track to roll out a 36-qubit system this quarter, with a 108-qubit system expected by year-end. That’s real progress—something most quantum stocks can’t claim.

Quantum Computing Inc. (NASDAQ: QUBT) – The Quantum Stock Traders Love to Hate

My seventh small-cap penny stock is Quantum Computing Inc. (NASDAQ: QUBT).

QUBT has been a battlefield stock all year. It ran 1,800%* in late 2024 during the quantum hype cycle but has been in free fall ever since.

It didn’t help that several short reports targeted QUBT, with good cause.

It had been surging off sector-wide optimism and technical price strength. After GTC, it lost another 14% in a single day. 

That said, stocks like this thrive on hype cycles. Quantum computing isn’t dead, and big tech is still investing in this space. If we see another wave of optimism, QUBT could easily bounce.

 

*Past performance does not indicate future results

Potential Benefits of Trading Small-Cap Stocks

Trading small-cap stocks may be risky, but there are potential benefits.

The lower prices make them attractive to newer traders and those with small accounts. That means more people can trade them. More buyers mean higher trading volume — and higher trading volume means more volatility. That means more chances for price swings.

Example of a Small-Cap Stock

Let’s look at SLGG, one of the companies listed above. It’s currently trading in the $6s and $7s and has a market cap of over 150 million shares. 

SLGG trades an average of more than 8 million shares a day — that’s a decent amount of trading volume. It spiked in early March from the $5 area to almost $9 on a surge in volume, meaning this stock has a history of good price action and volatility.

This is a prime example of what many day traders look for in small-caps. 

How to Analyze Small-Cap Stocks

There’s not always a lot of readily available information on small-caps. Analysts and investors may not pay much attention to them. This can leave traders to fill in the gaps.

But you can scan for these stocks and so much more with the StocksToTrade platform. It has beautiful charts, built-in scanners — even for small-caps — and so much more! Get a 14-day trial for just $7 here. 

And if you want to know how top traders get the news that can move stocks fast, check out the StocksToTrade Breaking News Chat add-on feature. Two Wall Street pros scan the markets and news to find the catalysts that can supercharge stock runs. 

Get StocksToTrade + the Breaking News Chat add-on in a 14-day trial — it’s just $17.

Risks of Trading Small-Cap Stocks

Of course there are risks with these stocks. There’s risk in all trading. So if you trade small-cap stocks, you need a solid approach for your risk management. That starts with knowing your risk tolerance…

But with small-caps, you also have to consider more volatility. It’s not unusual to see greater price fluctuations in lower-priced stocks. This can be great if you’re ready for it, but it can also be stressful. Prices can fluctuate so quickly, you may miss an exit point in the blink of an eye.

You can practice trading them to get used to the fast, wild moves with paper trading or by trading small positions.  

That’s how you learn why it’s so important to stick to your trading plan and manage your risk. And if you trade these stocks, consider setting stop-loss orders and limit sell orders to help protect your account. 

Where to Find Small-Cap Stocks

Finding small-cap stocks to trade has never been easier. It all starts with a great scanner.

Scanning can be easy with StocksToTrade’s built-in scans and point-and-click scanner. Get a 14-day trial for StocksToTrade for just $7 now! Or add the game-changing Breaking News Chat add-on for $17. I tell ya … It’s easy to get used to having two market pros on your team. They sift through the news and alert you to the items that have the potential to spike stocks. 

Frequently Asked Questions About Small-Cap Stocks

You’ve got more questions, and I have more answers. Let’s get into the super nitty-gritty.

Are Small-Cap Stocks Good?

For some traders, yes … For others, no. It depends on the size of your account, your trading plan, goals, and risk tolerance. While small-caps’ lower prices may be attractive to traders with smaller accounts, they may be riskier trades. 

You must be ready. Start with your education right here on the STT blog. Or you can join the SteadyTrade Team where you get access to twice-daily webinars and a full archive of educational content. You don’t have to go it alone in the markets!

What Is the Best Small-Cap Stock?

There are many! It depends on your criteria. Use the list above as a starting point for a watchlist, and find the stocks that fit your trading plan and your trading goals.

Is It Better to Trade Small Caps or Large Caps?

Again, it’s all about your trading goals. Do you want to play it safer with stocks that may make smaller gains and losses over time? Or are you more interested in a higher risk/higher reward style of trading? You decide what fits you best — then focus on learning all you can about your go-to strategy. 

Are Small-Cap Stocks Right for You?

If you aren’t sure if trading small-cap stocks is right for you, try paper trading first. Paper trading allows traders to gain market experience without risking their capital. It’s a way to develop your trading skills and gain confidence — without risking a dime…

Try it with your 14-day StocksToTrade trial for just $7! It includes a great paper trading feature.

Small-Cap Stocks: The Bottom Line

Trading small-caps isn’t for everyone. 

Before you trade, be sure to understand your position, what you’re willing to risk, and what your trading goals are. Where will you set your stop … and what kind of order will you place with your broker? You have a lot of decisions to make every day as a trader — do your best to prepare for it all. 

Always make a trading plan and stick to it. And know that you can always go at your own pace.

There’s a lot to consider when researching trading opportunities. Figuring out a company’s market cap is just one of them. Smart traders always look at the big picture … That’s what helps them find the top trading ideas.

When you’re starting out, it helps to have a team that keeps track of the market every day … like the SteadyTrade Team. You get hands-on mentorship twice a day, plus a great community to share ideas with. I hope to see you there!

What do you think of small-cap stocks? Do you trade them? Leave a comment below!