As we enter the new year, investors are eagerly anticipating the potential of small and mid-cap stocks in 2025. Two prominent financial experts, Tom Lee from Global Advisors and Delano Saporu from New Street Advisors, have shared their insights on the outlook for these small-cap companies.
A Good Year for Small-Cap Stocks
Tom Lee, managing partner at Global Advisors, has predicted a positive year for small and mid-cap stocks in 2025. According to Lee, interest rate cuts and the incoming administration will drive companies to be more expansionary and confident about mergers and acquisitions. Additionally, Lee noted that small-cap stocks are currently trading at a discount with a medium P/E multiple of 10.
In an interview with CNBC, Lee stated: "I think small caps could in the next couple of years outperform by more than 100%."
Delano Saporu from New Street Advisors also shares similar sentiments. He believes that small-cap stocks are well-positioned to outperform in 2025 due to their resilience in 2024, particularly in the last quarter. Donald Trump’s win has already driven significant gains in small-cap stocks, and with potential easing of regulations on businesses, Saporu expects these companies to thrive.
Why Small-Cap Stocks May Outperform
Small-cap stocks are conventionally focused on the domestic market, which makes them less exposed to international trade compared to large-cap counterparts. Therefore, Trump’s tariff policies will have a minimal impact on small-cap stocks compared to large-cap stocks.
Market Performance in 2024 and Expectations for 2025
The US stock market has delivered impressive gains in the past two years, with the S&P 500 index surging more than 25% in 2024. The tech-heavy Nasdaq 100 jumped up to 28%, while the Russell 2000 index soared more than 15%. The Dow Jones U.S. Small-Cap Index has risen by 18%.
Economic Outlook for 2025
Torsten Slok, economist at Apollo Global Management (APO), has released his 2025 economic outlook for the US. According to Slok, the US economy will deliver strong results with no signs of major slowing in 2025. He added that interest rates will likely stay "higher for longer" despite the Fed’s current interest rate-cutting cycle.
The US economy is expected to register GDP growth of 2.2% in 2025, signaling a modest growth driven by less restrictive monetary policy, resilient consumer spending, and a steadying labor market.
Invivyd, Inc. (NASDAQ:IVVD) – A Promising Penny Stock
Our list of the 12 Best Penny Stocks to Invest in According to the Media includes Invivyd, Inc. (NASDAQ:IVVD). In this article, we will take a closer look at why IVVDranks high on our list.
Why Hedge Funds Matter
To compile our list of best penny stocks to invest in according to media, we considered the performance and potential of these companies based on their financials and industry trends. We also analyzed the recommendations from top hedge funds, which have a proven track record of delivering returns for their investors.
Invivyd’s Business Outlook
Invivyd, Inc. (NASDAQ:IVVD) has demonstrated impressive growth in its net product revenue during the third quarter of 2024, driven by the sale of pemivibart. The company expects to turn profitable by mid-2025, driven by existing cash reserves and operational efficiency improvements.
Key Strengths of Invivyd
- Strong Cash Position: By the end of Q3, the company had $107 million in cash and cash equivalents.
- Diversified Revenue Streams: Invivyd has a diverse revenue stream from the sale of pemivibart, which positions it well for future growth.
- Expansion Plans: The company is expanding its commercial endeavors through collaborations with infusion centers and developing a digital presence to enhance its service for the immunocompromised community.
Conclusion
While our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame, we acknowledge the potential of Invivyd, Inc. (NASDAQ:IVVD) to grow. Its strong cash position, diversified revenue streams, and expansion plans make it an attractive investment opportunity.
As always, investors should do their own research and consider multiple factors before making any investment decisions.
Recommendations
- If you are looking for an AI stock that is more promising than IVVD but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
- Consider investing in small-cap stocks as they have shown resilience and potential for growth in the past two years.
By following these recommendations and considering multiple factors, investors can make informed decisions and navigate the complexities of the financial market.
