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. Keeping that in mind, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.
Two Stocks to Sell:
America's Car-Mart (CRMT)
Market Cap: $22.33 million
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ: CRMT) sells used cars to budget-conscious consumers.
Why Do We Steer Clear of CRMT?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Issuance of new shares over the last three years caused its earnings per share to fall by 31.2% annually
At $2.46 per share, America's Car-Mart trades at 20.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including CRMT in your portfolio.
American Express Global Business Travel (GBTG)
Market Cap: $4.88 billion
Originally spun off from American Express in 2014 but maintaining the Amex GBT brand, Global Business Travel Group (NYSE: GBTG) provides end-to-end business travel and expense management solutions, connecting corporate clients with travel suppliers and offering specialized software services.
Why Are We Hesitant About GBTG?
- Revenue increased by 12.5% annually over the last two years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
- Sky-high servicing costs result in an inferior gross margin of 59% that must be offset through increased usage
- Efficiency has decreased over the last year as its operating margin fell by 3.7 percentage points
American Express Global Business Travel’s stock price of $9.42 implies a valuation ratio of 1.5x forward price-to-sales. To fully understand why you should be careful with GBTG, check out our full research report (it’s free).
One Stock to Watch:
MediaAlpha (MAX)
Market Cap: $505.5 million
Powering nearly 10 million consumer referrals each month in the insurance marketplace, MediaAlpha (NYSE: MAX) operates a technology platform that connects insurance carriers with high-intent consumers shopping for property, casualty, health, and life insurance products.
Why Could MAX Be a Winner?
- Annual revenue growth of 69.6% over the last two years was superb and indicates its market share increased during this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Earnings per share have massively outperformed its peers over the last two years, increasing by 410% annually
MediaAlpha is trading at $12.19 per share, or 8.3x forward P/E. Is now a good 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.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
