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.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. Keeping that in mind, 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:
La-Z-Boy (LZB)
Market Cap: $1.51 billion
The prized possession of every mancave, La-Z-Boy (NYSE: LZB) is a furniture company specializing in recliners, sofas, and seats.
Why Are We Out on LZB?
- Sales tumbled by 5.3% annually over the last two years, showing consumer trends are working against its favor
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.9%
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
La-Z-Boy’s stock price of $36.69 implies a valuation ratio of 11.2x forward P/E. To fully understand why you should be careful with LZB, check out our full research report (it’s free).
Two Stocks to Watch:
ServisFirst Bancshares (SFBS)
Market Cap: $4.24 billion
Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.
Why Are We Backing SFBS?
- 9.7% annual net interest income growth over the last five years surpassed the sector average as its products resonated with borrowers
- Additional sales over the last five years increased its profitability as the 10.6% annual growth in its earnings per share outpaced its revenue
- Impressive 13.4% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
At $77.60 per share, ServisFirst Bancshares trades at 2.3x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
OFG Bancorp (OFG)
Market Cap: $1.89 billion
Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE: OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands.
Why Does OFG Stand Out?
- Efficiency ratio improvement of 10.5 percentage points over the last four years demonstrates its ability to scale effectively
- Share buybacks catapulted its annual earnings per share growth to 6.3%, which outperformed its revenue gains over the last two years
- Annual tangible book value per share growth of 11.8% over the last five years was superb and indicates its capital strength increased during this cycle
OFG Bancorp is trading at $42.15 per share, or 1.4x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking 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-micro-cap company Kadant (+351% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
