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.
Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. Keeping that in mind, here is one Russell 2000 stock that could be the next big thing and two that may face some trouble.
Two Stocks to Sell:
Dine Brands (DIN)
Market Cap: $331 million
Operating a franchise model, Dine Brands (NYSE: DIN) is a casual restaurant chain that owns the Applebee’s and IHOP banners.
Why Should You Dump DIN?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Efficiency has decreased over the last year as its operating margin fell by 4.3 percentage points
- 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $25.91 per share, Dine Brands trades at 5.7x forward P/E. If you’re considering DIN for your portfolio, see our FREE research report to learn more.
New Fortress Energy (NFE)
Market Cap: $162.2 million
Building its first floating liquefaction unit off the coast of Mexico in 2024, New Fortress Energy (NASDAQ: NFE) supplies liquefied natural gas (LNG) to power plants and industrial customers in emerging markets.
Why Is NFE Not Exciting?
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
New Fortress Energy is trading at $0.59 per share, or 79.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why NFE doesn’t pass our bar.
One Stock to Buy:
Montrose (MEG)
Market Cap: $824.3 million
Founded to protect a tree-lined two-lane road, Montrose (NYSE: MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Why Should You Buy MEG?
- Annual revenue growth of 15.3% over the last two years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 66.3% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 5.4 percentage points over the last five years, giving the company more chips to play with
Montrose’s stock price of $22.79 implies a valuation ratio of 16.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
