The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential. However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
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 deliver strong gains and two that may struggle to keep up.
Two Stocks to Sell:
Park-Ohio (PKOH)
Market Cap: $324.3 million
Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.
Why Do We Pass on PKOH?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.8% annually over the last two years
- Performance over the past two years was negatively impacted by new share issuances as its earnings per share dropped by 6.2% annually, worse than its revenue
- Cash burn makes us question whether it can achieve sustainable long-term growth
Park-Ohio is trading at $23.72 per share, or 7.7x forward P/E. Dive into our free research report to see why there are better opportunities than PKOH.
CONMED (CNMD)
Market Cap: $1.13 billion
With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE: CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products.
Why Are We Wary of CNMD?
- 5.1% annual revenue growth over the last two years was slower than its healthcare peers
- Smaller revenue base of $1.37 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Projected sales decline of 1.3% for the next 12 months points to a tough demand environment ahead
At $36.80 per share, CONMED trades at 8.4x forward P/E. Check out our free in-depth research report to learn more about why CNMD doesn’t pass our bar.
One Stock to Buy:
Abercrombie and Fitch (ANF)
Market Cap: $4.07 billion
Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE: ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults.
Why Is ANF a Good Business?
- Same-store sales growth averaged 10% over the past two years, showing it’s bringing new and repeat shoppers into its stores
- Unique assortment of products and pricing power result in a best-in-class gross margin of 62.8%
- Share buybacks catapulted its annual earnings per share growth to 481%, which outperformed its revenue gains over the last three years
Abercrombie and Fitch’s stock price of $88.74 implies a valuation ratio of 7.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
