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.
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. That said, here is one Russell 2000 stock that could be a breakout winner and two that may struggle to keep up.
Two Stocks to Sell:
Commvault (CVLT)
Market Cap: $7.48 billion
Born from the need to create ironclad protection in an increasingly dangerous digital world, Commvault (NASDAQ: CVLT) provides data protection and cyber resilience software that helps organizations secure, back up, and recover their data across on-premises, hybrid, and multi-cloud environments.
Why Does CVLT Worry Us?
- Sales trends were unexciting over the last five years as its 9.1% annual growth was well below the typical software company
- Estimated sales growth of 13.2% for the next 12 months implies demand will slow from its two-year trend
- Efficiency has decreased over the last year as its operating margin fell by 1.1 percentage points
Commvault’s stock price of $169.09 implies a valuation ratio of 6.4x forward price-to-sales. To fully understand why you should be careful with CVLT, check out our full research report (it’s free for active Edge members).
eXp World (EXPI)
Market Cap: $1.70 billion
Founded in 2009, eXp World (NASDAQ: EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Why Do We Pass on EXPI?
- Sluggish trends in its transactions suggest customers aren’t adopting its solutions as quickly as the company hoped
- Poor expense management has led to an operating margin of -0.5% that is below the industry average
- Earnings per share fell by 12.2% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
eXp World is trading at $10.80 per share, or 31x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including EXPI in your portfolio.
One Stock to Watch:
Stock Yards Bank (SYBT)
Market Cap: $2.07 billion
Founded in 1904 in Louisville and named after the city's historic livestock market district, Stock Yards Bancorp (NASDAQ: SYBT) operates a regional bank providing commercial banking, wealth management, and trust services across Kentucky, Indiana, and Ohio.
Why Is SYBT on Our Radar?
- Market share has increased this cycle as its 16.9% annual net interest income growth over the last five years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 6.7% outpaced its revenue gains
- Capital strength is on track to rise over the next 12 months as its 25.3% projected tangible book value per share growth implies profitability will accelerate from its two-year trend
At $70.12 per share, Stock Yards Bank trades at 1.9x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
