Is Aspen Aerogels (ASPN) The Small Cap Stock with Huge Upside Potential?

Yahoo

06-04-2025

We recently published a list of . In this article, we are going to take a look at where Aspen Aerogels, Inc. (NYSE:ASPN) stands against other small cap stocks with huge upside potential.
In times when everyone is chasing high-cap powerhouses, knowing the right stock to invest in at the right time and the right price is highly essential. In this race for Wall Street giants, one must slow down and ask if the stock is really worth it. Or better – is it set to yield the same returns as a high-growth small-cap stock? As Francis Gannon, Co-Chief Investment Officer at Royce Investment Partners, says:
'Small-cap stocks are a 'forgotten' group that present lucrative opportunities for investors seeking diversification amid market uncertainties.'
Small-cap stocks have a market capitalization between $300 million and $2 billion. Although generally more volatile and risky, history shows that small-cap stocks have often outperformed large-cap stocks. During the tech bubble of the 1990s, large-cap stocks were everyone's favorite, until the bubble burst in March 2000, when more and more small-cap companies witnessed better performance. In general, the performance of the stock doesn't entirely depend on whether the stock is large-cap or small-cap but more on where the macro and micro environments are taking the business. However, since the small-cap stocks are usually away from the analysts' eyes, they are more undervalued, and so can provide a solid return on the investment.
Since there is a high growth potential for such a stock, small-cap stocks are highly valued by analysts. As the business itself is in an early stage of growth, there is more room for a stock boom. Volatility is another reason for holding these stocks. There is an increased likelihood of short-term trading and price swings that an investor can capitalize on. Additionally, many such stocks operate in specialized or niche markets, allowing the analysts to leverage interesting and unique business models, and that too, if successful, can return immensely. The fact that small-cap stocks are common targets for mergers and acquisitions is another reason to believe in these stocks. Analysts keep track of these stocks with the expectation of buyouts, which often leads to a premium in share price.
A research report by John Hancock Investment Management on understanding the performance of small-cap stocks indicated that, historically, small-cap stocks have had higher average returns than large-cap stocks. As small-cap stocks work well in diversified portfolios, they behave differently than large-cap stocks. The study examined the existence of size premiums in the United States, emphasizing the historical performance of Fama/French U.S. Small and Large Cap portfolios. The findings show that since the 1920s, small-cap stocks have outperformed large-cap stocks. Another research by Invesco in 2020 revealed that small caps have outpaced large caps from the past four recessions in all but one of the following 1- and 3-year periods.
To decide which small-cap stock is right for you, it is pertinent to monitor closely not only the stock itself but also its peers, as it provides a bigger picture. The factors that are crucial in the choice you make include the liquidity position, sensitivity to market swings, financial stability, and connection to AI. The stocks that we have selected are among the ones yielding high upside potential across a range of industries like financial, food, and mining.
We have used Finviz and Stock Analysis screeners to select ten stocks with market capitalizations between $300 million and $2 billion. The one-year price targets have been extracted from Yahoo Finance to calculate the upside potential based on the stocks' prices as of March 28, 2025. These companies are then listed according to their upside potential.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
A technician meticulously inspecting a corrosion-resistant insulation panel for a fire-protection system.
Upside Potential: 166%
Market Capitalization: $540.25 million
Aspen Aerogels, Inc. (NYSE:ASPN) is an aerogel technology company that engages in the design, development, and marketing of aerogel materials incorporated in the energy, industrial, electric vehicle, and sustainable insulation materials markets across the United States, Canada, Asia, Europe, and Latin America. Claiming to be a technology leader in sustainability, this Massachusetts-based company promotes the adoption of EVs, energy efficiency, and the availability of cleaner fuels in conventional energy markets through its products. It is among the stocks with the biggest upside.
In its recent earnings call, the company announced an impressive 90% year-over-year growth, with the adjusted EBITDA rising to $90 million from a loss of $23 million. Many believe it to be just the beginning. The Energy Industrial segment of Aspen Aerogels, Inc. (NYSE:ASPN) is forecasted to keep rising, with a 2025 guidance of $35 million to $40 million.
The company's PyroThin Thermal Barriers Design Award from Volvo Truck, marking it to be the second one in the commercial vehicle segment, is yet another growth catalyst. While production will begin in the second half of 2026, sales are forecasted to ramp up in 2027.
Amid Trump's conservative trade approach, Aspen Aerogels, Inc. (NYSE:ASPN) has adopted an effective pricing strategy, achieving optimization and collaboration with the EMF partner to reduce product costs. The Energy Industrial business is actually what the stakeholders are counting on as it will promote an exacerbated focus on energy and power generation. With this in mind, the stock clearly shows signs of huge upside potential.
Overall, ASPN ranks 3rd on our list of small cap stocks with huge upside potential. While we acknowledge the potential of ASPN, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ASPN but that trades at less than 5 times its earnings, check out our report about this .
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.