In recent times, there has been significant interest in small and mid-cap stocks due to their potential for high returns. In this article, we will explore the outlook for small-cap stocks in 2025 and examine the performance of Karyopharm Therapeutics Inc. (NASDAQ:KPTI), one of the top penny stocks according to media reports.
Why Small-Cap Stocks are Expected to Outperform
On December 24, Tom Lee, managing partner at Global Advisors, shared his insights on the potential of small and mid-cap stocks in 2025. According to Lee, interest rate cuts and the incoming administration will boost companies’ confidence, leading to expansionary policies and an increase in mergers. Additionally, Lee pointed out that small-cap stocks are 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%."
New Street Advisors CEO Delano Saporu Shares Similar Views
New Street Advisors CEO Delano Saporu also expressed optimism about the performance of small-cap stocks. He attributed this to the resilience shown by the economy, particularly in the last quarter, which suggests a promising outlook for businesses.
Donald Trump’s win has already driven significant gains in small-cap stocks due to growing enthusiasm around potential easing of regulations on businesses. Small-cap stocks are typically focused on the domestic market and have less exposure to international trade compared to large-cap counterparts. Therefore, Trump’s tariff policies will not have a major impact on small-cap stocks compared to large-cap stocks.
US Stock Market Performance in 2024
The US stock market has delivered impressive gains for the second consecutive year. The S&P 500 index surged more than 25% in 2024, while the tech-heavy Nasdaq 100 jumped up to 28%. The Russell 2000 index, which covers small-cap companies, soared more than 15% over the last year. The Dow Jones U.S. Small-Cap Index has risen by 18%.
Apollo Global Management’s Economic Outlook for 2025
Torsten Slok, economist at Apollo Global Management (APO), 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.
Why Hedge Funds Matter
Our list of best penny stocks to invest in according to the media was compiled by gathering over 50 penny stocks from financial media websites on the internet. We then selected the top 12 penny stocks that were the most widely held by hedge funds as of Q3 2024.
The list is ranked in ascending order based on the number of hedge fund holders in each stock. The reason we care about what hedge funds do is simple: our research has shown that we can outperform the market by imitating their investment strategies.
Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Performance
Karyopharm Therapeutics Inc. (NASDAQ:KPTI) ranks 8th on our list of best penny stocks to invest in according to media reports. The company has achieved its third consecutive quarter of net product revenue growth during the third quarter of 2024.
The net US XPOVIO revenue sustained its growth from a year ago and posted $29.5 million for Q3. Meanwhile, the net revenue reached $38.8 million in Q3, up from $36 million from a year ago. The strong commercial performance of XPOVIO has been a key contributor to Karyopharm’s success.
The company has expanded its reimbursement and regulatory approvals for its lead assets in Italy and France. With further developments of its candidates in ongoing phase three studies, Karyopharm Therapeutics Inc. (KPTI) looks like a solid penny stock to invest in.
Conclusion
While we acknowledge the potential of KPTI to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KPTI but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next:
- 8 Best Wide Moat Stocks to Buy Now: This article explores the top wide moat stocks to invest in for long-term growth.
- 30 Most Important AI Stocks According to BlackRock: This report highlights the top AI stocks according to BlackRock, one of the largest investment firms in the world.
Disclosure:
None. This article is originally published at Insider Monkey.
