The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on. However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.
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 two Russell 2000 stocks that could be the next big thing and one that may struggle to keep up.
One Stock to Sell:
CoreCivic (CXW)
Market Cap: $2.23 billion
Originally founded in 1983 as the first private prison company in the United States, CoreCivic (NYSE: CXW) operates correctional facilities, detention centers, and residential reentry programs for government agencies across the United States.
Why Are We Wary of CXW?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Performance surrounding its average available beds has lagged its peers
- Underwhelming 6.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $21.15 per share, CoreCivic trades at 16.8x forward P/E. To fully understand why you should be careful with CXW, check out our full research report (it’s free).
Two Stocks to Watch:
Sterling (STRL)
Market Cap: $8.38 billion
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Are We Backing STRL?
- 9.9% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Free cash flow margin increased by 12.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Improving returns on capital reflect management’s ability to monetize investments
Sterling’s stock price of $276.16 implies a valuation ratio of 31.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Rumble (RUM)
Market Cap: $2.68 billion
Founded in 2013 as a champion for content creator rights and free expression, Rumble (NASDAQ: RUM) is a video sharing platform that positions itself as a free speech alternative to mainstream platforms, offering creators more favorable revenue-sharing opportunities.
Why Does RUM Stand Out?
- Impressive 19% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
Rumble is trading at $7.94 per share, or 19.8x trailing 12-month price-to-sales. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. 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 Comfort Systems (+782% 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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