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. That said, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.
Two Stocks to Sell:
Ocular Therapeutix (OCUL)
Market Cap: $1.87 billion
Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ: OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.
Why Do We Think OCUL Will Underperform?
- Sales tumbled by 6.7% annually over the last two years, showing market trends are working against it during this cycle
- Efficiency has decreased over the last five years as its adjusted operating margin fell
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased
At $8.54 per share, Ocular Therapeutix trades at 35.3x forward price-to-sales. If you’re considering OCUL for your portfolio, see our FREE research report to learn more.
ProPetro (PUMP)
Market Cap: $1.94 billion
Operating exclusively in the Permian Basin—one of America's most prolific oil-producing regions—ProPetro (NYSE: PUMP) provides hydraulic fracturing services that pump high-pressure fluid and sand into oil wells to release trapped hydrocarbons.
Why Do We Pass on PUMP?
- Modest revenue base of $1.18 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 27.4% is below its competitors, leaving less money to invest in exploration and production
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
ProPetro’s stock price of $15.93 implies a valuation ratio of 114.3x forward P/E. Read our free research report to see why you should think twice about including PUMP in your portfolio.
One Stock to Watch:
PJT (PJT)
Market Cap: $3.99 billion
Spun off from Blackstone in 2015 and founded by former Morgan Stanley executive Paul J. Taubman, PJT Partners (NYSE: PJT) is an advisory-focused investment bank that provides strategic advice, restructuring services, and fundraising solutions to corporations, boards, and investment firms.
Why Is PJT on Our Radar?
- Annual revenue growth of 18.7% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 42% outpaced its revenue gains
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
PJT is trading at $154.37 per share, or 20x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
