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 deliver strong gains and two that may struggle to keep up.
Two Stocks to Sell:
Kura Sushi (KRUS)
Market Cap: $877.4 million
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ: KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Does KRUS Worry Us?
- Efficiency has decreased over the last year as its operating margin fell by 4.6 percentage points
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Cash-burning history makes us doubt the long-term viability of its business model
Kura Sushi’s stock price of $72 implies a valuation ratio of 1,120.5x forward P/E. Dive into our free research report to see why there are better opportunities than KRUS.
Herbalife (HLF)
Market Cap: $803.6 million
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE: HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Why Is HLF Not Exciting?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Earnings per share have dipped by 21.7% annually over the past three years, which is concerning because stock prices follow EPS over the long term
At $7.89 per share, Herbalife trades at 3.9x forward P/E. Read our free research report to see why you should think twice about including HLF in your portfolio.
One Stock to Buy:
Ibotta (IBTA)
Market Cap: $1.42 billion
Originally launched as a way to make grocery shopping more rewarding for budget-conscious consumers, Ibotta (NYSE: IBTA) is a mobile shopping app that allows consumers to earn cash back on everyday purchases by completing tasks and submitting receipts.
Why Will IBTA Beat the Market?
- Rise in total redemptions indicates high demand for its offerings
- Estimated revenue growth of 7.5% for the next 12 months implies its momentum over the last two years will continue
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 53.4% outpaced its revenue gains
Ibotta is trading at $49.99 per share, or 15.9x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
