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 are three Russell 2000 stocks that don’t make the cut and some better choices instead.

8x8 (EGHT)

Market Cap: $238.9 million

Founded in 1987, 8x8 (NYSE: EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.

Why Do We Think EGHT Will Underperform?

1. Offerings struggled to generate meaningful interest as its average billings growth of 1.3% over the last year did not impress
2. Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
3. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low

At $1.70 per share, 8x8 trades at 0.3x forward price-to-sales. To fully understand why you should be careful with EGHT, check out our full research report (it’s free).

Ruger (RGR)

Market Cap: $540 million

Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.

Why Is RGR Risky?

1. Annual sales declines of 3.9% for the past two years show its products and services struggled to connect with the market
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 14.6% annually while its revenue grew
3. Waning returns on capital imply its previous profit engines are losing steam

Ruger’s stock price of $33.41 implies a valuation ratio of 18.8x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than RGR.

Berkshire Hills Bancorp (BHLB)

Market Cap: $1.11 billion

Founded in 1846 as a community financial institution in Massachusetts, Berkshire Hills Bancorp (NYSE: BHLB) is a regional bank holding company that provides commercial banking, retail banking, wealth management, and lending services through branches across the Northeast.

Why Do We Think Twice About BHLB?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Annual net interest income growth of 2.3% over the last five years was below our standards for the bank sector
3. Forecasted tangible book value per share decline of 13.3% for the upcoming 12 months implies profitability will deteriorate significantly

Berkshire Hills Bancorp is trading at $24.23 per share, or 0.9x forward P/B. Check out our free in-depth research report to learn more about why BHLB doesn’t pass our bar.

Stocks We Like More

Donald Trump’s April 2024 "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 5 Strong Momentum 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. 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.