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 big thing and one that may struggle to keep up.
One Stock to Sell:
Steelcase (SCS)
Market Cap: $1.16 billion
Founded in 1912 when metal office furniture was replacing wooden alternatives, Steelcase (NYSE: SCS) is a global office furniture manufacturer that designs and produces workplace solutions including desks, chairs, architectural products, and services.
Why Should You Dump SCS?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.2% annually over the last five years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Low returns on capital reflect management’s struggle to allocate funds effectively
Steelcase is trading at $10.16 per share, or 9.3x forward P/E. If you’re considering SCS for your portfolio, see our FREE research report to learn more.
Two Stocks to Watch:
Brinker International (EAT)
Market Cap: $7.76 billion
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Why Do We Like EAT?
- Average same-store sales growth of 11.7% over the past two years indicates its restaurants are resonating with diners
- Operating margin improvement of 3.6 percentage points over the last year demonstrates its ability to scale efficiently
- Free cash flow margin expanded by 4.2 percentage points over the last year, providing additional flexibility for investments and share buybacks/dividends
At $173 per share, Brinker International trades at 18.8x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Granite Construction (GVA)
Market Cap: $3.90 billion
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Why Are We Fans of GVA?
- Annual revenue growth of 12.2% over the last two years was superb and indicates its market share increased during this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 60.9% annually
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Granite Construction’s stock price of $89.07 implies a valuation ratio of 8.3x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Strong Momentum 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-micro-cap company Kadant (+351% 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
