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 are two Russell 2000 stocks that could deliver strong gains and one that may struggle to keep up.
One Stock to Sell:
Cathay General Bancorp (CATY)
Market Cap: $3.82 billion
Founded in 1962 with its first branch in Los Angeles' Chinatown, Cathay General Bancorp (NASDAQ: CATY) operates Cathay Bank, providing commercial banking services to businesses and individuals with a strong presence in Asian-American communities.
Why Does CATY Fall Short?
- Muted 3.7% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- 6.5% annual net interest income growth over the last five years was slower than its banking peers
- Performance over the past two years shows its incremental sales were less profitable, as its 1.1% annual earnings per share growth trailed its revenue gains
Cathay General Bancorp’s stock price of $57.01 implies a valuation ratio of 1.2x forward P/B. Read our free research report to see why you should think twice about including CATY in your portfolio.
Two Stocks to Watch:
Verra Mobility (VRRM)
Market Cap: $2.09 billion
Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NASDAQ: VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.
Why Could VRRM Be a Winner?
- Market share has increased this cycle as its 21.7% annual revenue growth over the last five years was exceptional
- Offerings are mission-critical for businesses and result in a best-in-class gross margin of 60.9%
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 20.1% annually
At $13.79 per share, Verra Mobility trades at 10.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Helmerich & Payne (HP)
Market Cap: $3.86 billion
Operating the largest fleet of super-spec rigs in North America with technology that can drill horizontal wells over two miles long, Helmerich & Payne (NYSE: HP) provides drilling rigs and crews to oil and gas companies that need wells drilled to extract hydrocarbons from underground.
Why Should HP Be on Your Watchlist?
- Annual revenue growth of 32.2% over the past five years was outstanding, reflecting market share gains this cycle
- Revenue base of $4.00 billion gives it economies of scale and some negotiating power with suppliers
- EBITDA margin improvement of 11.1 percentage points over the last five years demonstrates its ability to scale efficiently
Helmerich & Payne is trading at $38.65 per share, or 39.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
