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 is one Russell 2000 stock that could be the next big thing and two that may face some trouble.
Two Stocks to Sell:
GATX (GATX)
Market Cap: $5.70 billion
Originally founded to ship beer, GATX (NYSE: GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Does GATX Worry Us?
- Number of active railcars has disappointed over the past two years, indicating weak demand for its offerings
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
GATX’s stock price of $159.96 implies a valuation ratio of 17.4x forward P/E. Read our free research report to see why you should think twice about including GATX in your portfolio.
Jackson Financial (JXN)
Market Cap: $6.71 billion
Spun off from British insurer Prudential plc in 2021 after more than 60 years as its U.S. subsidiary, Jackson Financial (NYSE: JXN) offers annuity products and retirement solutions that help Americans grow and protect their retirement savings and income.
Why Do We Think Twice About JXN?
- 2.8% annualized net premiums earned growth over the last two years lagged behind its insurance peers
- Efficiency has decreased over the last four years as its pre-tax profit margin fell by 33.9 percentage points
- Earnings per share have dipped by 9.9% annually over the past three years, which is concerning because stock prices follow EPS over the long term
Jackson Financial is trading at $96.29 per share, or 0.6x forward P/B. Check out our free in-depth research report to learn more about why JXN doesn’t pass our bar.
One Stock to Watch:
First Financial Bancorp (FFBC)
Market Cap: $2.43 billion
Tracing its roots back to 1863 during the Civil War era, First Financial Bancorp (NASDAQ: FFBC) is a bank holding company that provides commercial banking, lending, deposit services, and wealth management to individuals and businesses.
Why Does FFBC Stand Out?
- Performance over the past five years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Annual tangible book value per share growth of 17% over the past two years was outstanding, reflecting strong capital accumulation this cycle
- Industry-leading 10% return on equity demonstrates management’s skill in finding high-return investments
At $25.42 per share, First Financial Bancorp trades at 0.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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).
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