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.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. Keeping that in mind, here is one Russell 2000 stock that could be a breakout winner and two that may struggle to keep up.
Two Stocks to Sell:
Werner (WERN)
Market Cap: $1.60 billion
Conducting business in over a 100 countries, Werner (NASDAQ: WERN) offers full-truckload, less-than-truckload, and intermodal delivery services.
Why Should You Dump WERN?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.7% annually over the last two years
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 37.2% annually while its revenue grew
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Werner is trading at $26.58 per share, or 33.8x forward P/E. Dive into our free research report to see why there are better opportunities than WERN.
Great Lakes Dredge & Dock (GLDD)
Market Cap: $767 million
Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ: GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.
Why Are We Hesitant About GLDD?
- Annual revenue growth of 2.9% over the last five years was below our standards for the industrials sector
- Forecasted revenue decline of 1.3% for the upcoming 12 months implies demand will fall off a cliff
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
Great Lakes Dredge & Dock’s stock price of $11.54 implies a valuation ratio of 14.2x forward P/E. Check out our free in-depth research report to learn more about why GLDD doesn’t pass our bar.
One Stock to Buy:
Huron (HURN)
Market Cap: $2.11 billion
Founded in 2002 during a time of significant regulatory change in corporate America, Huron Consulting Group (NASDAQ: HURN) is a professional services company that helps organizations develop growth strategies, optimize operations, and implement digital transformation solutions.
Why Do We Love HURN?
- Annual revenue growth of 10.9% over the past two years was outstanding, reflecting market share gains this cycle
- Adjusted operating margin improvement of 7.5 percentage points over the last five years demonstrates its ability to scale efficiently
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 27.8% exceeded its revenue gains over the last two years
At $132.38 per share, Huron trades at 17.1x forward P/E. Is now the time to initiate a position? 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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