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 be a breakout winner and two that may struggle to keep up.
Two Stocks to Sell:
Movado (MOV)
Market Cap: $345.3 million
With its watches displayed in 20 museums around the world, Movado (NYSE: MOV) is a watchmaking company with a portfolio of watch brands and accessories.
Why Does MOV Worry Us?
- Products and services have few die-hard fans as sales have declined by 6% annually over the last two years
- Projected sales growth of 3.8% for the next 12 months suggests sluggish demand
- Eroding returns on capital suggest its historical profit centers are aging
At $15.53 per share, Movado trades at 0.5x trailing 12-month price-to-sales. Dive into our free research report to see why there are better opportunities than MOV.
Kforce (KFRC)
Market Cap: $574.4 million
With nearly 60 years of matching skilled professionals with the right opportunities, Kforce (NYSE: KFRC) is a professional staffing company that specializes in placing technology and finance experts with businesses on both temporary and permanent bases.
Why Do We Pass on KFRC?
- Annual sales declines of 9.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 13.8% annually, worse than its revenue declines
- Waning returns on capital imply its previous profit engines are losing steam
Kforce is trading at $32.50 per share, or 13.4x forward P/E. If you’re considering KFRC for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Distribution Solutions (DSGR)
Market Cap: $1.44 billion
Founded in 1952, Distribution Solutions (NASDAQ: DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.
Why Do We Like DSGR?
- Impressive 17.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Sound unit economics and 33.7% gross margin allow for higher marketing and R&D budgets versus competitors
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 22.6% annually
Distribution Solutions’s stock price of $31.11 implies a valuation ratio of 21.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2024, 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 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).
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 Tecnoglass (+1,754% 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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