Although small-cap stocks have underperformed the broader market this year, the group could see a boom in 2025 as President-elect Donald Trump takes office. Year to date, the Russell 2000 index has advanced more than 11%, while the S&P 500 has posted year-to-date gains of more than 26%. However, since Trump's victory, investor enthusiasm around the potential easing of regulations on businesses has sent the small-cap index to new heights.
The moves come as stocks more broadly have also seen massive gains in the wake of the election, with all three major averages notching multiple all-time and closing records following the outcome. With that in mind, CNBC Pro screened for small caps that may be poised to advance in the year ahead, based on the following criteria: Trade at a discount relative to the sector Trade at a discount relative to their subindustry Have upside to their price target Are up more than 5% over the past month Below are the names that made the cut, according to FactSet data as of Dec. 17. Shares of Bath & Body Works have fallen more than 9% this year. Looking to next year, analysts believe the stock can go higher, forecasting almost 20% upside potential. In fact, TD Cowen recently named the stock as one of its best ideas for 2025, calling it an 'underappreciated story.' 'BBWI is at an inflection point for growth after prolonged sales declines since the peak during COVID from a combination of a heightened level of newness (collaborations, adjacencies, Everyday Luxury items), candles & sanitizer category overhang starting to abate, international sales being less of a drag (< 5% of sales), and marketing initiatives focused to drive higher awareness,' analyst Jonna Kim told clients in a note earlier this month. 'We continue to see BBWI as undervalued at ~10x FY26 P/E vs. its growth and margin profile'
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