12 Small Cap Stocks with High Upside Potential

In this article, we will take a look at the 12 Small Cap Stocks with High Upside Potential.

The trade war saga between the U.S. and China appears to be nearing a conclusion, as China’s Ministry of Commerce shared details on the trade deal on June 27. Both countries have confirmed details of a trade framework that will facilitate the export of rare earths and ease restrictions on technology. China will review and approve export applications for items subject to export rules, whereas the U.S. will cancel different restrictive measures taken against Beijing.

On June 26, a White House official clarified the U.S.’s agreement with China and said both countries have agreed to “an additional understanding of a framework to implement the Geneva agreement.”

Also Read: 10 Best 52-Week Low Tech Stocks To Buy According to Analysts and 10 Best IT Stocks to Buy According to Analysts.

This development signals a better second half of the year. According to Deloitte’s latest economic outlook, the U.S. real consumer spending is expected to rise 1.4% in 2025 before growing at 1.5% in 2026. Spending on services is expected to soar by 1.5% in 2025 and in 2026, as services will be less impacted by tariffs and interest rates.

In the last month, the iShares Russell 2000 ETF has soared over 4.95%, as of June 30, indicating notable recovery.

With these trends in view, let’s take a look at the 12 small-cap stocks with high upside potential.

A closeup of investor hands holding a small-cap investment security.

Our Methodology

To compile our list of the 12 Small-Cap Stocks with High Upside Potential, we used the Finviz screener. Based on our methodology, we shortlisted the stocks with a market capitalization equal to or less than $1 billion and an analyst upside of more than 10%. Finally, we ranked the stocks based on the number of hedge funds holding stakes in these stocks, and the hedge fund data is taken from the Insider Monkey Q1 2025 database. Please note that the data was recorded on June 27, 2025.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

12 Small-Cap Stocks with High Upside Potential 

Market Capitalization: $900.11 Million

Analyst Upside: 50.43%

No. of Hedge Fund Investors: 14

Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) is one of the 12 Small Cap Stocks with High Upside Potential. On June 17, Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) announced the opening of its new store in Ruidoso, New Mexico, this fall. The new location in Ruidoso will be the company’s seventh location in the “Land of Enchantment”. The store will be located within the 70 West Plaza Shopping Center,

In addition to the Natural Grocers’ new planned store launch, the company recently expanded its house brand Cheese line with five new organic varieties. Consumers can enjoy these new premium quality products at an Always Affordable Price, reflecting the value of Natural Grocers’ brand.

Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) is a speciality retailer of natural and organic groceries, body care products, and dietary supplements. Its stores provide a wide range of organic products in a smaller-store format with a clean and easy shopping atmosphere for its customers.

Market Capitalization: $970.46 Million

Analyst Upside: 40.30%

No. of Hedge Fund Investors: 15

Enerflex Ltd. (NYSE:EFXT) is one of the 12 Small Cap Stocks with High Upside Potential. On June 26, RBC Capital kept its Buy rating on EFXT, maintaining the price target at $12.

Keith Mackey RBC Capital reiterated its rating on Enerflex Ltd. stock following the company’s strong Q1 2025 results. The company posted adjusted earnings of around $0.23, surpassing consensus by $0.02. The analyst remains optimistic about Enerflex’s progress as the company’s energy infrastructure and aftermarket services contributed almost 70% of the gross margin. Enerflex made notable development during Q1 with the addition of nearly 20,000 horsepower to its U.S. contract compression fleet. The company plans to cross 475,000 horsepower by the end of 2025. Mackey sees strong growth going forward as Enerflex’s international energy infrastructure business is backed by $1.3 billion of contracted revenue with an average contract term of five years.

Enerflex Ltd. (NYSE:EFXT) is an energy infrastructure and energy transition company offering solutions in North America, Latin America, and the Eastern Hemisphere. The company’s portfolio consists of compression, processing, cryogenic, and treated water solutions.

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