The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on. However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. Keeping that in mind, here is one Russell 2000 stock that could be a breakout winner and two that may face some trouble.
Two Stocks to Sell:
Sprout Social (SPT)
Market Cap: $759.8 million
Born from the recognition that businesses needed a centralized way to handle their growing social media presence, Sprout Social (NASDAQ: SPT) provides a comprehensive software platform that helps businesses manage, analyze, and optimize their presence across various social media networks.
Why Do We Think Twice About SPT?
- Underwhelming ARR growth of 10.1% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
- Estimated sales growth of 5.3% for the next 12 months implies demand will slow from its two-year trend
- Poor expense management has led to operating margin losses
Sprout Social’s stock price of $12.50 implies a valuation ratio of 1.4x forward price-to-sales. If you’re considering SPT for your portfolio, see our FREE research report to learn more.
Amneal (AMRX)
Market Cap: $6.91 billion
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Are We Cautious About AMRX?
- Estimated sales growth of 3.3% for the next 12 months implies demand will slow from its two-year trend
- Annual earnings per share growth of 4.8% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Low returns on capital reflect management’s struggle to allocate funds effectively
Amneal is trading at $19.70 per share, or 19.3x forward P/E. To fully understand why you should be careful with AMRX, check out our full research report (it’s free).
One Stock to Watch:
Boot Barn (BOOT)
Market Cap: $3.49 billion
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE: BOOT) is a western-inspired apparel and footwear retailer.
Why Do We Like BOOT?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Comparable store sales rose by 6.7% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Market share is on track to rise over the next 12 months as its 14.5% projected revenue growth implies demand will accelerate from its three-year trend
At $116.50 per share, Boot Barn trades at 13.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
