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. That said, here are three Russell 2000 stocks that don’t make the cut and some better choices instead.
BigCommerce (BIGC)
Market Cap: $433.3 million
Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ: BIGC) provides software for businesses to easily create online stores.
Why Do We Avoid BIGC?
- ARR growth averaged a weak 4% over the last year, suggesting that competition is pulling some attention away from its software
- Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its three-year trend
- Poor expense management has led to operating margin losses
BigCommerce’s stock price of $5.37 implies a valuation ratio of 1.2x forward price-to-sales. Check out our free in-depth research report to learn more about why BIGC doesn’t pass our bar.
Vishay Intertechnology (VSH)
Market Cap: $2.16 billion
Named after the founder's ancestral village in present-day Lithuania, Vishay Intertechnology (NYSE: VSH) manufactures simple chips and electronic components that are building blocks of virtually all types of electronic devices.
Why Do We Pass on VSH?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.1% annually over the last two years
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 25.5% annually
- 15.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Vishay Intertechnology is trading at $16.12 per share, or 7.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including VSH in your portfolio.
Provident Financial Services (PFS)
Market Cap: $2.23 billion
Founded in 1839 and serving communities across New Jersey, Pennsylvania, and New York, Provident Financial Services (NYSE: PFS) operates a regional bank providing commercial, residential, and consumer lending alongside wealth management and insurance services.
Why Does PFS Worry Us?
- Earnings per share fell by 26.5% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Tangible book value per share tumbled by 1.4% annually over the last five years, showing banking sector trends are working against its favor during this cycle
- High interest payments compared to its earnings raise concerns about its ability to service its debt consistently
At $17.14 per share, Provident Financial Services trades at 0.8x forward P/B. If you’re considering PFS for your portfolio, see our FREE research report to learn more.
Stocks We Like More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 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.
