Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names. But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
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:
Revolve (RVLV)
Market Cap: $1.69 billion
Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve (NYSE: RVLV) is a fashion retailer leveraging social media and a community of fashion influencers to drive its merchandising strategy.
Why Is RVLV Not Exciting?
- Sales trends were unexciting over the last three years as its 6.6% annual growth was below the typical consumer internet company
- May need to improve its platform and marketing strategy as its 6.5% average growth in active customers underwhelmed
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
At $23.69 per share, Revolve trades at 13.8x forward EV/EBITDA. Check out our free in-depth research report to learn more about why RVLV doesn’t pass our bar.
ProPetro (PUMP)
Market Cap: $1.39 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 $1.16 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Gross margin of 27.3% reflects its high production costs and unfavorable asset base
- Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 5.9 percentage points
ProPetro is trading at $11.39 per share, or 59.6x forward P/E. To fully understand why you should be careful with PUMP, check out our full research report (it’s free).
One Stock to Watch:
ANI Pharmaceuticals (ANIP)
Market Cap: $1.61 billion
With a diverse portfolio of 116 pharmaceutical products and a growing rare disease platform, ANI Pharmaceuticals (NASDAQ: ANIP) develops, manufactures, and markets branded and generic prescription pharmaceuticals, with a focus on rare disease treatments.
Why Are We Positive on ANIP?
- Annual revenue growth of 34.7% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 19.9% annually over the last five years and trumped its peers
- Free cash flow margin jumped by 38.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
ANI Pharmaceuticals’s stock price of $75.37 implies a valuation ratio of 8.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
