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 are two Russell 2000 stocks that could be the next breakout winners and one that may struggle to keep up.
One Stock to Sell:
Hope Bancorp (HOPE)
Market Cap: $1.72 billion
With roots in serving Korean-American communities and now expanded to a multi-ethnic clientele across 12 states, Hope Bancorp (NASDAQ: HOPE) operates Bank of Hope, providing commercial and retail banking services with a focus on serving multi-ethnic communities across the United States.
Why Are We Bearish on HOPE?
- Loans are facing end-market challenges during this cycle, as seen in its flat net interest income over the last five years
- Earnings per share fell by 4.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Tangible book value per share stagnated over the last two years, limiting its ability to leverage its balance sheet to make additional investments
Hope Bancorp’s stock price of $13.43 implies a valuation ratio of 0.7x forward P/B. To fully understand why you should be careful with HOPE, check out our full research report (it’s free).
Two Stocks to Watch:
Vita Coco (COCO)
Market Cap: $3.47 billion
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ: COCO) offers coconut water products that are a natural way to quench thirst.
Why Will COCO Beat the Market?
- Products are selling at a rapid clip as its unit sales averaged an outstanding 15.2% growth rate over the past two years
- Additional sales over the last three years increased its profitability as the 42.9% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin increased by 12.9 percentage points over the last year, giving the company more capital to invest or return to shareholders
Vita Coco is trading at $58.88 per share, or 28.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Noble Corporation (NE)
Market Cap: $7.04 billion
With origins dating back over a century to 1921, Noble Corporation (NYSE: NE) operates drilling rigs that oil and gas companies charter to drill wells in deep ocean waters and shallow seas.
Why Does NE Catch Our Eye?
- Annual revenue growth of 29.7% over the last five years was superb and indicates its market share increased during this cycle
- Economies of scale give it more fixed cost leverage than its smaller competitors
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
At $44.37 per share, Noble Corporation trades at 54.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
