3 Small Caps Drawing Insider and Institutional Support

Key Points

• Institutions are buying Boot Barn stock as the retailer projects strong sales growth despite tariff uncertainty.
• Sterling Infrastructure is attracting big institutional buys as it capitalizes on e-commerce and data center construction demand.
• At least one Congressional insider is bullish on Tactile Systems growth potential in at-home edema therapy despite recent stock volatility.

After lagging behind large-cap peers for the past two years, small-cap stocks may finally be poised for a breakout in the second half of 2025. With interest rate cuts potentially on the horizon, improving macroeconomic conditions, and attractive relative valuations, institutional investors are beginning to rotate into this overlooked segment of the market.

One of the most reliable telltales of opportunity in small caps is insider and institutional buying. When executives and directors put their capital to work, strong fundamentals and institutional buying back those trades can be a powerful signal for individual investors. 

Here are three small-cap stocks where insider/institutional confidence and solid business performance align at just the right time.

Here’s Why Boot Barn May Continue to Kick Higher

Among retail stocks, Boot Barn NYSE: BOOT may be one of the best houses in a bad neighborhood. The company just completed its fiscal year (FY) 2025 with 5% year-over-year (YOY) growth in consolidated same-store sales. It's also projecting 2% YOY growth in the current year, even with plans to increase store count by 14%.

Those numbers may be too conservative. The company is projecting 13% total net sales growth. However, the company’s guidance assumes that it will have to raise prices due to tariffs. Boot Barn sources a meaningful portion of its private-label and third-party merchandise from China and Mexico.

The company acknowledges that higher prices would weaken consumer demand. But what if the guidance is wrong? Boot Barn’s FY2026 guidance from May assumes a 30% tariff on China, a 10% global tariff rate, and a 0% tariff on Mexico.

The China number alone may be changed, and in any event, it's unclear when it will become effective.

Tariff concerns were likely a key reason that institutional buying slowed in the second quarter of 2025 (the first quarter of the company’s fiscal year). However, BOOT stock is up more than 35% in the last 12 months and over 11% in 2025, pushing its market cap just over $5 billion. That’s an illustration of the growth investors can get when they find the right small-cap stocks.

This Infrastructure Stock Is Up Over 2,000% in the Last 5 Years

Sterling Infrastructure NASDAQ: STRL is a sector leader that specializes in E-infrastructure, transportation, and building solutions. STRL stock is up more than 2,300% in the past five years, which has pushed the company’s market cap to over $7 billion.

Have investors missed their chance to buy? If you’re looking for another 2,300%, then yes. But the stock is likely to continue moving higher.

That’s because the company fills a niche that allows it to serve large, blue-chip companies in areas such as e-commerce and next-generation data centers. Plus, the company just announced its intention to purchase CEC Facilities Group, which will expand its opportunities across several of its existing verticals.

Institutions love STRL stock. In the current quarter, institutional buying of $46 million was in contrast to institutional selling of just $1 million. Plus, even as the stock has been on a tear, one member of Congress, Gilber Ray Cisneros, Jr., a congressman from California, made a purchase in March.  

Tactile Systems: Undervalued Medtech With Insider Conviction

With a market cap of $230 million, Tactile Systems Technology Inc. NASDAQ: TCMD is the true small cap in this group of stocks. Tactile Systems is a medical device company that specializes in home therapy solutions for patients with chronic edema and related vascular conditions.

According to the company, this is a large, underpenetrated market with significant growth potential to be a $10 billion total addressable market (TAM) driven by demographic trends such as an aging population and the increasing prevalence of chronic health conditions.

The company has delivered steady revenue growth, but it’s not consistently profitable. TCMD stock is down 41% in 2025 as investors have grown skeptical about the size of the company’s TAM. Nevertheless, Tactile has continued to deliver steady YOY revenue growth and maintain robust gross margins of around 70%.

Institutional buying has slowed, but notably, the company has a high-profile supporter. In the last couple of years, Tina Smith, a congresswoman from the company’s home state of Minnesota, has made two separate purchases of the stock.