The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential. However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. Keeping that in mind, here are three Russell 2000 stocks to steer clear of and some alternatives to watch instead.
Tecnoglass (TGLS)
Market Cap: $2.16 billion
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE: TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Do We Think Twice About TGLS?
- Sales trends were unexciting over the last two years as its 7.3% annual growth was below the typical industrials company
- Earnings per share have contracted by 3.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Free cash flow margin shrank by 10.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $45.69 per share, Tecnoglass trades at 11.7x forward P/E. If you’re considering TGLS for your portfolio, see our FREE research report to learn more.
AerSale (ASLE)
Market Cap: $285.5 million
Providing a one-stop shop that integrates multiple services and product offerings, AerSale (NASDAQ: ASLE) delivers full-service support to mid-life commercial aircraft.
Why Is ASLE Risky?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Cash-burning history makes us doubt the long-term viability of its business model
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
AerSale is trading at $6.06 per share, or 10.3x forward P/E. Check out our free in-depth research report to learn more about why ASLE doesn’t pass our bar.
Peoples Bancorp (PEBO)
Market Cap: $997 million
Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ: PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.
Why Are We Wary of PEBO?
- Estimated net interest income growth of 2.7% for the next 12 months implies demand will slow from its five-year trend
- 44.7 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 13.5% annually while its revenue grew
Peoples Bancorp’s stock price of $28.47 implies a valuation ratio of 0.8x forward P/B. To fully understand why you should be careful with PEBO, check out our full research report (it’s free for active Edge members).
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 (+1,326% 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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