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.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. Keeping that in mind, here is one Russell 2000 stock that could be the next big thing and two that may face some trouble.
Two Stocks to Sell:
Malibu Boats (MBUU)
Market Cap: $612.9 million
Founded in California in 1982, Malibu Boats (NASDAQ: MBUU) is a manufacturer of high-performance sports boats and luxury watercrafts.
Why Should You Dump MBUU?
- Number of boats sold has disappointed over the past two years, indicating weak demand for its offerings
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
At $31.89 per share, Malibu Boats trades at 24.2x forward P/E. If you’re considering MBUU for your portfolio, see our FREE research report to learn more.
P10 (PX)
Market Cap: $1.17 billion
Operating as a bridge between institutional investors and hard-to-access private market opportunities, P10 (NYSE: PX) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.
Why Does PX Fall Short?
- Annual earnings per share growth of 7.1% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Low return on equity reflects management’s struggle to allocate funds effectively
P10’s stock price of $10.61 implies a valuation ratio of 10.6x forward P/E. Read our free research report to see why you should think twice about including PX in your portfolio.
One Stock to Buy:
Abercrombie and Fitch (ANF)
Market Cap: $4.43 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 Should You Buy ANF?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 11.9% growth over the past two years
- Collection of products is difficult to replicate at scale and results in a best-in-class gross margin of 63.3%
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Abercrombie and Fitch is trading at $95.75 per share, or 9.6x 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
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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.
