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.
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 is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.
Two Stocks to Sell:
Bandwidth (BAND)
Market Cap: $1.70 billion
Powering communications for tech giants like Microsoft, Google, and Zoom, Bandwidth (NASDAQ: BAND) provides cloud-based communications software and APIs that enable businesses to embed voice, messaging, and emergency services into their applications and platforms.
Why Do We Avoid BAND?
- Annual revenue growth of 11.9% over the last two years was below our standards for the software sector
- Gross margin of 37.2% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
Bandwidth is trading at $53 per share, or 1.9x forward price-to-sales. If you’re considering BAND for your portfolio, see our FREE research report to learn more.
Amneal (AMRX)
Market Cap: $5.81 billion
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ: AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Does AMRX Fall Short?
- Estimated sales growth of 3.3% for the next 12 months implies demand will slow from its two-year trend
- Incremental sales over the last five years were less profitable as its 4.8% annual earnings per share growth lagged its revenue gains
- Underwhelming 6.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
Amneal’s stock price of $17.89 implies a valuation ratio of 18.5x forward P/E. Dive into our free research report to see why there are better opportunities than AMRX.
One Stock to Watch:
EVERTEC (EVTC)
Market Cap: $1.77 billion
Operating one of Latin America's leading PIN debit networks called ATH, EVERTEC (NYSE: EVTC) is a payment transaction processor and financial technology provider that enables merchants and financial institutions across Latin America and the Caribbean to accept and process electronic payments.
Why Does EVTC Stand Out?
- Annual revenue growth of 12.6% over the last two years beat the sector average and underscores the unique value of its offerings
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
At $29.58 per share, EVERTEC trades at 7.3x 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
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.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
