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.
Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. That said, here are three Russell 2000 stocks to steer clear of and some alternatives to watch instead.
Hyster-Yale Materials Handling (HY)
Market Cap: $571.4 million
Playing a significant role in the development of the hydraulic lift truck, Hyster-Yale (NYSE: HY) designs, manufactures, and sells materials handling equipment to various sectors.
Why Are We Out on HY?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.1% annually over the last two years
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 41.4% annually
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
Hyster-Yale Materials Handling’s stock price of $31.86 implies a valuation ratio of 114.7x forward P/E. To fully understand why you should be careful with HY, check out our full research report (it’s free).
Ridgepost Capital (RPC)
Market Cap: $808 million
Operating as a bridge between institutional investors and hard-to-access private market opportunities, Ridgepost Capital (NYSE: RPC) 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 RPC Worry Us?
- Incremental sales over the last two years were less profitable as its 5.7% annual earnings per share growth lagged its revenue gains
- ROE of 4.5% reflects management’s challenges in identifying attractive investment opportunities
At $7.34 per share, Ridgepost Capital trades at 7x forward P/E. Read our free research report to see why you should think twice about including RPC in your portfolio.
CVB Financial (CVBF)
Market Cap: $3.91 billion
With roots dating back to 1974 and a focus on serving small and medium-sized businesses, CVB Financial (NASDAQ: CVBF) operates Citizens Business Bank, providing banking, lending, and trust services to businesses and individuals across California.
Why Do We Think Twice About CVBF?
- 5.6% annual net interest income growth over the last five years was slower than its banking peers
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
- Muted 2% annual tangible book value per share growth over the last five years shows its capital generation lagged behind its banking peers
CVB Financial is trading at $22.20 per share, or 1.2x forward P/B. If you’re considering CVBF for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
