Small-Cap Stocks That Have Outperformed the S&P 500

Small-cap stocks, typically valued between $300 million and $2 billion in market capitalization, are often overlooked by the average investor. However, billionaire investors see them as opportunities for significant growth. These companies can offer outsized returns, but they also carry higher volatility and risk. Here’s a curated list of small-cap stocks that billionaires are buying, based on recent market trends and investor filings.

Small-cap stocks are the rocket fuel of the investing world—compact, agile, and ready to blast off. Valued between $250 million and $2 billion, these companies can soar into mid-cap orbit ($2B–$10B) with the right catalysts: explosive revenue growth, innovative products, or booming sectors. In Q1 2025, the Russell 2000 small-cap index climbed 12%, outpacing the S&P 500’s 8% (Yahoo Finance), fueled by $12B in venture capital (Forbes). This article unveils 10 small-cap rockets primed for liftoff, complete with key metrics, growth drivers, and actionable insights. Let’s launch!

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Small-cap stocks—typically companies with market capitalizations between $300 million and $2 billion—have long been a fertile hunting ground for value investors. While large-cap stocks often dominate headlines, small-caps can offer compelling opportunities for outsized returns, especially when they trade below their intrinsic value.

Value investing is about finding stocks trading below their intrinsic worth, offering the potential for outsized returns when the market recognizes their true value. While large-cap value stocks often dominate headlines, the small-cap universe—companies with market capitalizations between $300 million and $2 billion—offers a fertile hunting ground for value investors.

Small-cap stocks—companies with market capitalizations between $300 million and $2 billion—are often overlooked in favor of their large-cap counterparts. Yet, these companies are frequently the engines of innovation, agility, and rapid expansion, offering investors the potential for outsized returns over long investment horizons.

Small-cap stocks—typically defined as companies with market capitalizations between $300 million and $2 billion—are often the engines of innovation and rapid expansion in the equity markets

Introduction For decades, the S&P 500 has served as the benchmark for U.S. stock market performance. Its blue-chip constituents—giant companies with global reach—are synonymous with stability, resilience, and long-term growth. Yet, beneath the surface, a less-heralded group of small-cap stocks has, at times, delivered returns that far outpace the S&P 500. These companies, typically valued between $300 million and $2 billion, offer investors a unique blend of risk and reward. In recent years, and especially in 2024 and 2025, small-cap stocks have begun to shine anew, capturing the attention of savvy investors eager for outsized gains. This essay explores the drivers behind small-cap outperformance, presents recent examples, and examines why the current environment may be especially favorable for these nimble market players. ________________________________________ The Cyclical Nature of Small-Cap vs. Large-Cap Performance Stock market leadership is cyclical. For much of the past decade, large-cap stocks—especially the “Magnificent Seven” tech giants—have dominated returns, overshadowing small- and mid-cap peers2. However, history shows that these cycles eventually reverse. According to Furey Research Partners, leadership alternates between large- and small-caps in cycles typically lasting seven to ten years2. The current era of large-cap outperformance has been unusually long, but signs suggest a shift is underway as we move through 2025.

Small-cap stocks ($250M–$2B market cap) are buried treasures in the $1.5T small-cap sea (Nasdaq), and acquisition targets are the X-marks-the-spot for corporate raiders and private equity pirates. In Q2 2025, M&A deal volume in small-caps hit $50B, up 25% from Q1, driven by lower interest rates and deregulation (Insider Monkey).

Small-cap stocks ($250M–$2B market cap) are unpolished diamonds in the $1.5T small-cap market (Nasdaq), and billionaire investors are the master jewelers spotting their sparkle. In Q2 2025, hedge funds and billionaires poured $1B into small-caps, a 30% jump from Q1, signaling breakout potential (Insider Monkey).

Introduction: Striking Gold in the Small-Cap Frontier Small-cap stocks ($250M–$2B market cap) are glittering nuggets in the $1.5T small-cap market (Nasdaq), and insider buying is the prospector’s pickaxe revealing undervalued gold. In Q2 2025, insiders poured $600M into small-cap shares, a 20% jump from Q1, signaling breakout potential (Insider Monkey).

Small-cap stocks ($250M–$2B market cap) are hidden treasures in the $1.5T small-cap market (Nasdaq), and insider buying is the map to unearth them. In Q1 2025, insiders bought $500M in small-cap shares, signaling undervaluation (Insider Monkey). X posts call these “breakout signals” (@ainvest_vision), with biotech, tech, and financials shining. Despite a 2% Russell 2000 dip in May 2025 (Yahoo Finance), insider confidence points to 30–50% upside (Forbes).

Small-cap stocks, valued between $250M and $2B, are like rocket boosters primed to blast into mid-cap orbit ($2B–$10B), fueling the $1.5T small-cap market (Nasdaq). In Q2 2025, small-caps in the Russell 2000 surged 15%, outpacing the S&P 500’s 10%, driven by $10B in venture capital (Forbes).

Small-cap fintech stocks, valued between $5 million and $500 million, are like master keys to the $305B global fintech industry, projected to hit $1.2T by 2030 (Forbes). In Q2 2025, fintech small-caps in the Russell 2000 microcap segment surged 26%, outpacing the index’s 11%, fueled by $8B in venture capital (U.S. News). X posts hype them as “fintech dynamite” (@StockSavvyShay), with payment processing, lending, and wealth management leading the charge.