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.
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 a breakout winner and two best left off your watchlist.
Two Stocks to Sell:
AMC Networks (AMCX)
Market Cap: $252.9 million
Originally the joint-venture of four cable television companies, AMC Networks (NASDAQ: AMCX) is a broadcaster producing a diverse range of television shows and movies.
Why Should You Dump AMCX?
- Products and services aren't resonating with the market as its revenue declined by 4.6% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 17.7% annually, worse than its revenue declines
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
AMC Networks’s stock price of $5.62 implies a valuation ratio of 1.9x forward P/E. Check out our free in-depth research report to learn more about why AMCX doesn’t pass our bar.
Byline Bancorp (BY)
Market Cap: $1.17 billion
Ranking as the fifth most active Small Business Administration lender in the country, Byline Bancorp (NYSE: BY) is a Chicago-based bank that provides banking services to small and medium-sized businesses, commercial real estate developers, and consumers.
Why Are We Cautious About BY?
- Estimated net interest income growth of 4.6% for the next 12 months implies demand will slow from its five-year trend
- Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 20.3 basis points (100 basis points = 1 percentage point)
- Anticipated 2.6 percentage point rise in its efficiency ratio suggests its expenses will increase as a percentage of revenue
At $25.61 per share, Byline Bancorp trades at 0.9x forward P/B. To fully understand why you should be careful with BY, check out our full research report (it’s free).
One Stock to Buy:
Federal Signal (FSS)
Market Cap: $7.45 billion
Developing sirens that warned of air raid attacks or fallout during the Cold War, Federal Signal (NYSE: FSS) provides safety and emergency equipment for government agencies, municipalities, and industrial companies.
Why Will FSS Beat the Market?
- Operating margin expanded by 4.4 percentage points over the last five years as it scaled and became more efficient
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 28.5% annually, topping its revenue gains
- Free cash flow margin grew by 4.1 percentage points over the last five years, giving the company more chips to play with
Federal Signal is trading at $122.57 per share, or 30.2x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at 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.
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