5 Small Stocks to Buy Now: Which Ones Could Outperform in 2025?

The macro backdrop is shifting decisively in favor of growth equities. After maintaining interest rates between 5.25% and 5.50% from mid-2023 through September 2024, the Federal Reserve has begun its easing cycle. Three consecutive rate cuts have brought the benchmark rate down to 4.25%-4.50%, while inflation pressures continue to moderate. This combination of lower borrowing costs and improving economic conditions is creating a compelling backdrop for small-cap equities—historically the biggest winners when the Fed pivots dovish.

Small-cap stocks have long thrived during periods of controlled inflation and steady economic expansion. Right now, a select group of emerging smaller companies appear particularly well-positioned to capitalize on this tailwind. We’ve identified five small stocks to buy now that combine strong growth metrics with bullish analyst sentiment: Climb Global Solutions (CLMB), AudioEye (AEYE), Byrna Technologies (BYRN), Travelzoo (TZOO), and Hippo Holdings (HIPO). Each carries either a Zacks Rank of 1 (Strong Buy) or 2 (Buy), paired with a Growth Score of A or B—a combination that historically correlates with outperformance.

Climb Global Solutions: M&A Momentum Meets Organic Expansion

CLMB has been one of 2024’s standout performers, surging 135% year-to-date. The value-added IT distributor specializes in emerging technologies and is demonstrating disciplined execution on both organic and acquisition-driven growth.

On the organic side, the company expanded its German operations and implemented a new enterprise resource planning system to boost operational efficiency. Inorganically, CLMB acquired Douglas Stewart Software and successfully merged it with its DataSolutions Ireland division, adding 20 fresh vendor partnerships in the process. These moves are paying dividends: the Zacks Consensus Estimate for 2025 earnings has been raised to $4.55 per share from $3.59 over the past two months. With a market cap of $593 million and a Zacks Rank of 1, CLMB exemplifies how strategic small-cap operators can compound shareholder value during favorable macroeconomic windows.

AudioEye: Accessibility Tech Rides Education and Government Tailwinds

The cloud-based accessibility solutions provider has been a market darling, with AEYE stock delivering a stunning 211% return year-to-date. The company develops screen reader technologies and voice-driven platforms that make digital content more usable and accessible.

What’s driving this performance is a combination of innovation and smart partnerships. AudioEye recently expanded its relationship with Finalsite, a major player in K-12 education technology, opening new revenue channels in the school sector. Simultaneously, an expanded partnership with CivicPlus—which serves over 10,000 local government clients—positions AEYE to penetrate the municipal market with specialized go-to-market strategies. Earnings estimates for 2025 have been revised upward to $0.69 per share from $0.58, signaling growing investor confidence. At $205.3 million in market cap with a Zacks Rank of 2, AEYE showcases how niche tech players can achieve outsized returns when operating leverage improves.

Byrna Technologies: Non-Lethal Demand Surge Across Latin America

Non-lethal equipment manufacturer Byrna Technologies has delivered an impressive 351% YTD return. The company manufactures innovative defensive technologies and is benefiting from surging demand in Latin American markets, where macroeconomic stabilization is boosting government and institutional purchasing.

BYRN is ramping production capacity to meet this rising demand while simultaneously building supply chain resilience through dual-sourcing of critical components. Management expects robust demand momentum throughout 2025. The consensus earnings estimate for fiscal 2025 has been raised to $0.23 per share from $0.20 in recent weeks. With a market capitalization of $647.8 million and a Zacks Rank of 2, BYRN represents a small-cap play on both geopolitical trends and improving emerging market conditions.

Travelzoo: Membership Model Restructuring for Margin Expansion

Entertainment and travel deals platform Travelzoo gained 118% in 2024 and is positioned for 2025 upside via strategic pricing actions. The company recently introduced a revised membership fee structure designed to materially boost revenues in the coming year.

Beyond top-line growth, TZOO is disciplined about cost management, keeping fixed expenses lean to drive margin expansion. The 2025 earnings consensus has been raised to $1.21 per share from $1.19 over the past 60 days. At a $245.4 million market cap with a Zacks Rank of 2 and Growth Score of A, Travelzoo demonstrates how even traditional internet media businesses can re-accelerate when management implements smart pricing and efficiency initiatives.

Hippo Holdings: Insurance Innovation Amid Sector Recovery

Property casualty insurance innovator Hippo Holdings has soared 195% year-to-date as the company executes a strategic pivot toward its less volatile segments. HIPO operates as a licensed insurance agent while developing proprietary homeowner protection products underwritten by established carriers.

The company is expanding geographically by adding new homebuilder partnerships across California, Florida, and Texas—markets with strong housing activity. More importantly, HIPO is deliberately shifting focus toward Insurance-as-a-Service and ancillary services, which carry lower exposure to underwriting volatility and weather-related losses. The company is demonstrating tangible operational improvement: 2025 loss estimates have narrowed to a loss of $1.85 per share from a projected loss of $2.45 just days ago. With a $656.3 million market cap, a Zacks Rank of 2, and visible path to profitability, HIPO exemplifies how small-cap financial services firms can unlock shareholder value through strategic repositioning.

The Bottom Line

These five small stocks to buy now share common traits: strong analyst conviction, measurable business momentum, and exposure to favorable macroeconomic trends. While small-cap investing carries inherent volatility, this curated group offers a compelling risk-reward setup for 2025 as the Fed’s easing cycle unfolds.