Recent times have been challenging for small-cap stocks, but a shift could be on the horizon as interest rates decline. While many small caps have struggled, a notable number have still outperformed the broader market, with several seeing their stock prices more than double year-to-date.
As we head towards the end of the year, let’s explore some of the exceptional performers in the small-cap sector. Although anything can happen in the following days, as of early December, here are some of the top small caps of 2024.
Note: This list features stocks with market capitalizations ranging from $100 million to $2 billion, all traded on major exchanges.
TSS Inc. – Up Nearly 3,700%
TSS Inc. (NASDAQ:), known as Total Site Solutions, specializes in comprehensive technology solutions for data centers and similar environments. The company offers an integrated platform that includes modular edge services, data center services, and configuration services.
Since mid-August, TSS’s stock has surged dramatically as the market reacted positively to the emergence of a lesser-known data center stock, seemingly overlooked by analysts. Remarkably, in the September quarter, the company reported a staggering 689% year-over-year revenue increase, which contributed to the stock’s rise.
Bright Minds Biosciences – Up Nearly 2,600%
Bright Minds Biosciences Inc. (NASDAQ:) focuses on developing treatments for central nervous system disorders. Their lead treatment for rare epilepsy forms is currently in Phase 2 clinical trials. BMB-101 acts as a highly selective 5-HT2C agonist, aimed at chronic dosing with potential cognitive benefits.
After experiencing stagnation for much of the year, Bright Minds’ shares skyrocketed in late September following a successful $35 million non-brokered private placement that attracted significant investors, including Cormorant Asset Management and RA Capital Management.
Monopar Therapeutics – Up 1,400% YTD
Monopar Therapeutics Inc. (NASDAQ:) is a clinical-stage biotechnology firm that develops next-generation, cancer-targeted radiopharmaceuticals. Their drug candidate ALXN1840 for Wilson disease has successfully met its primary endpoint in Phase 3 trials. Recently, Monopar entered into an agreement with Alexion (NASDAQ:) and AstraZeneca (NASDAQ:) for this late-stage drug candidate.
Monopar’s other treatments are progressing, with MNPR-101, targeting advanced solid tumors, currently in a Phase 1 trial.
This year has been eventful for Monopar, with significant movement in its share price following the announcement of the partnership with Alexion and AstraZeneca, before ultimately rallying through early December.
Sezzle – Up Nearly 1,100% YTD
Close to transitioning from small-cap status, Sezzle Inc. (NASDAQ:) offers a buy-now-pay-later service, enabling consumers to make purchases now and pay in four interest-free installments over six weeks. They also provide the option of making monthly payments on larger purchases over a duration of three to 48 months.
Sezzle’s stock exhibited gradual growth throughout the year until a significant spike in early November, when it jumped from around $205 to nearly $370 per share. This sharp increase followed a robust earnings report, in which the company exceeded earnings-per-share estimates by over 200%, reporting $2.92 per share compared to the expected 89 cents. Revenue also exceeded analysts’ forecasts, totaling $69.7 million against $52.6 million expected.
Dave – Up 900%+
Dave Inc. (NASDAQ:) is a digital banking service offering a mobile app focused on cash advances. The company claims to have assisted over six million members with 97 million cash advances.
Dave employs an AI-driven underwriting model that evaluates cash flow instead of traditional credit scores to determine eligibility for ExtraCash advances. This model analyzes over 180 data points, including income, spending patterns, and member history.
Throughout the year, Dave’s shares have steadily appreciated, culminating in a notable surge in early November.
Honorable Mentions
Additionally, a couple of other intriguing small caps worthy of mention have experienced substantial growth this year, despite falling below my self-imposed threshold of $100 million in market capitalization.
Synergy CHC Corp (NASDAQ:) has surged over 4,400% in 2024. This consumer health company markets and distributes various health products through numerous distribution channels, with brands like Focus Factor supplements and Flat Tummy weight loss products.
Nexalin Technology Inc. (NASDAQ:) has gained 675% amidst a rollercoaster journey of price fluctuations. This company provides a treatment for anxiety and insomnia through a non-invasive, stimulating waveform delivered at home.
Why Small Caps Could Outperform Ahead
There’s much discussion around the potential resurgence of small caps as interest rates decline. In fact, small caps have outperformed larger companies at certain times in the latter half of this year. Additionally, small caps reached a new peak at the start of December following President-Elect Donald Trump’s nomination of Scott Bessent for secretary of the Treasury.
One of the advantages of investing in small caps is the potential for significant returns, albeit accompanied by substantial risk. This volatility is illustrated in the notable price swings of several stocks mentioned, even as they remain substantially higher for the year as of early December.
Historical trends show that small caps typically excel compared to large caps during periods of economic recovery and declining interest rates as inflation subsides. As always, investors should conduct their due diligence before making any investment decisions.
