Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names. But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. Keeping that in mind, here are three Russell 2000 stocks that don’t make the cut and some better choices instead.
eHealth (EHTH)
Market Cap: $130.1 million
Aiming to address a high-stakes and often confusing decision, eHealth (NASDAQ: EHTH) guides consumers through health insurance enrollment and related topics.
Why Do We Think Twice About EHTH?
- Value proposition isn’t resonating strongly as its estimated membership averaged 2.7% drops over the last two years
- Estimated sales decline of 4.7% for the next 12 months implies a challenging demand environment
- Cash burn makes us question whether it can achieve sustainable long-term growth
eHealth is trading at $4.24 per share, or 2.8x forward EV/EBITDA. Read our free research report to see why you should think twice about including EHTH in your portfolio.
Papa John's (PZZA)
Market Cap: $1.34 billion
Founded by the eclectic John “Papa John” Schnatter, Papa John’s (NASDAQ: PZZA) is a globally recognized pizza delivery and carryout chain known for “better ingredients” and “better pizza”.
Why Is PZZA Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Gross margin of 12.1% reflects the bad unit economics inherent in most restaurant businesses
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 3.6 percentage points
At $40.69 per share, Papa John's trades at 23.7x forward P/E. Dive into our free research report to see why there are better opportunities than PZZA.
Merit Medical Systems (MMSI)
Market Cap: $5.22 billion
Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ: MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.
Why Does MMSI Worry Us?
- Subscale operations are evident in its revenue base of $1.48 billion, meaning it has fewer distribution channels than its larger rivals
- Low returns on capital reflect management’s struggle to allocate funds effectively
Merit Medical Systems’s stock price of $88.00 implies a valuation ratio of 22.8x forward P/E. Check out our free in-depth research report to learn more about why MMSI doesn’t pass our bar.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 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 (+1,545% 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
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