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 are two Russell 2000 stocks that could deliver strong gains and one that may face some trouble.
One Stock to Sell:
Marriott Vacations (VAC)
Market Cap: $3.19 billion
Spun off from Marriott International in 1984, Marriott Vacations (NYSE: VAC) is a vacation company providing leisure experiences for travelers around the world.
Why Do We Avoid VAC?
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- 11× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Marriott Vacations’s stock price of $94.08 implies a valuation ratio of 12.7x forward P/E. Read our free research report to see why you should think twice about including VAC in your portfolio.
Two Stocks to Watch:
Urban Outfitters (URBN)
Market Cap: $6.63 billion
Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ: URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.
Why Are We Fans of URBN?
- Offensive push to build new stores and attack its untapped market opportunities is backed by its same-store sales growth
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 4.8% growth over the past two years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 42.4% exceeded its revenue gains over the last three years
At $68.67 per share, Urban Outfitters trades at 10.9x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Happen Bank (HAPN)
Market Cap: $2.10 billion
Pioneering peer-to-peer lending in the US before evolving into a digital bank, Happen Bank (NYSE: HAPN) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
What Makes HAPN Stand Out?
- Impressive 28.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 109% outpaced its revenue gains
- Management team has demonstrated it can invest in profitable ventures through its 11.5% five-year return on equity
Happen Bank is trading at $18.77 per share, or 10.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
