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.
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 is one Russell 2000 stock that could be the next big thing and two best left off your watchlist.
Two Stocks to Sell:
Owens & Minor (OMI)
Market Cap: $606.8 million
With roots dating back to 1882 and operations spanning approximately 80 countries, Owens & Minor (NYSE: OMI) is a healthcare solutions company that manufactures medical supplies, distributes products to healthcare providers, and delivers medical equipment directly to patients.
Why Does OMI Fall Short?
- Annual sales growth of 3.2% over the last two years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Underwhelming 3.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Owens & Minor’s stock price of $7.92 implies a valuation ratio of 4.4x forward P/E. To fully understand why you should be careful with OMI, check out our full research report (it’s free).
Progyny (PGNY)
Market Cap: $1.81 billion
Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ: PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.
Why Does PGNY Give Us Pause?
- Modest revenue base of $1.21 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Estimated sales growth of 3% for the next 12 months implies demand will slow from its two-year trend
- Negative returns on capital show management lost money while trying to expand the business
Progyny is trading at $21.15 per share, or 12.8x forward P/E. If you’re considering PGNY for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Trustmark (TRMK)
Market Cap: $2.05 billion
Tracing its roots back to 1889 in Mississippi, Trustmark (NASDAQ: TRMK) is a financial services organization providing banking, wealth management, insurance, and mortgage services across five southeastern states.
Why Are We Fans of TRMK?
- Loans resonate with borrowers, evidenced by its respectable 9.2% annualized net interest income growth over the last four years
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 9.5% annually
- Annual tangible book value per share growth of 20.2% over the past two years was outstanding, reflecting strong capital retention this cycle
At $33.89 per share, Trustmark trades at 1x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 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
