Small-Cap Stars for 2025: My Top Picks for Big Returns

As 2024 draws to a close, it’s time for investors to gear up for the opportunities and challenges that 2025 will bring. With geopolitical tensions rising, such as the aggressive policies of Trump and political instability in Korea, adopting a defensive strategy when structuring portfolios is not just prudent — it’s essential.

This means focusing on fundamentally strong, profitable companies. For small-cap enthusiasts like myself, here are three stocks that I am including in my 2025 portfolio:

Pesona Metro Holdings has established itself as a notable player in construction and property development. Its recent acquisition of a 51%-owned subsidiary has delivered commendable results in recent quarters.

According to Apex Securities, the company’s profit after tax is projected to reach RM27.3 million for FY2025, supported by an impressive RM2.2 billion order book. At its current valuation, Pesona Metro trades at a price-to-earnings ratio (PER) of under five times, signalling significant upside potential for investors.

Known for iconic snacks like Super Ring, Oriental Food Industries is a leading food and beverage producer in Malaysia. Despite recent pressure on its share price following a weaker quarterly performance due to one-off foreign exchange losses, the company’s core earnings remain robust. With its strong branding and stable growth trajectory, Oriental Food is trading at a compelling valuation of less than 10 times PER, presenting a solid opportunity for long-term investors.

While not widely known, Lotus KFM has been delivering consistent profits as part of the consumer staples industry. The company’s recent diversification into the bamboo industry — a high-growth sector in Southeast Asia — adds another layer of potential. Despite this strategic expansion, the share price has remained stable, reflecting little of the positive outlook. Should the bamboo initiative succeed, Lotus KFM is poised for a significant boost in profitability, making it a hidden gem for forward-thinking investors.