CNBC picks four small caps primed for growth next year
CNBC has put forward four small-cap stocks “for the stocking” going into 2025. These companies operate in different sectors but have a couple things in common: their shares have risen over 5% in the last month, yet they remain undervalued compared to their peers and have further upside, according to CNBC.
Bath & Body Works
With a market capitalization of nearly $8.5 billion, Bath & Body Works makes personal care products and home fragrances. Though its shares have fallen more than 9% year to date, they have surged over 27% in the last 30 days. Analysts believe there is still 14.5% upside, based on their average target price of $44.80 per share, according to MarketWatch. Investment bank TD Cowen recently named Bath & Body Works one of its top ideas for 2025, CNBC noted.
The company is at a turning point following a prolonged decline since the pandemic-era peak, says TD Cowen analyst Jonna Kim. Bath & Body Works is expanding beyond malls, growing its international presence, and enhancing brand recognition, Kim explained in a client note.
Alaska Airlines
Shares of Alaska Airlines have soared 73% in 2024 and climbed 29% in the last month. Analysts tracked by MarketWatch see 10% more upside, based by their average target price of $74.50 per share.
Morgan Stanley has Alaska Airlines as its top airline stock pick for next year, CNBC reports. A key growth catalyst will be the airline’s $1.9 billion acquisition of competitor Hawaiian Airlines, completed in September. The combined entity could emerge as a new intercontinental carrier akin to Delta Air Lines, United Airlines, and American Airlines, according to Morgan Stanley analyst Ravi Shanker.
Academy Sports and Outdoors
Retailer Academy Sports and Outdoors has lost approximately 11% of its value since January. However, it has gained about 25% in the last month, and analysts believe there is still room to run, according to MarketWatch. The average target price is $62.50 per share, for 7% upside versus the last closing price.
Recently, Citi added the company to its watchlist, highlighting reduced pressures on the stock since the pandemic, CNBC writes. Academy Sports and Outdoors may benefit from shifts in consumer spending, noted Royce Funds portfolio manager Miles Lewis. The retailer caters to low- and middle-income shoppers, who have been among the hardest hit by high inflation and interest rates, Lewis explained. With the Fed starting rate cuts in the autumn, the outlook for the company looks to be improving.
Sprinklr
Sprinklr develops software solutions for various industries, ranging from retailers to financial and governmental organizations. Its shares have dropped nearly 26% year to date but have gained almost 8% in the last month. According to MarketWatch, Sprinklr’s average target price stands at $10.10 per share, implying 13% upside from the most recent closing price.
In December, JPMorgan downgraded Sprinklr from “overweight” to “neutral,” effectively withdrawing its buy recommendation. The bank cited concerns that the management’s new plan, which is supposed to boost profits above 40%, will take time to materialize, Investing.com reported. For context, Sprinklr’s revenue in the first quarter of the 2025 fiscal year, which ended October 31, increased 8% to $200.7 million.
