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 the next big thing and two best left off your watchlist.
Two Stocks to Sell:
Sphere Entertainment (SPHR)
Market Cap: $1.74 billion
Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE: SPHR) hosts live entertainment events and distributes content across various media platforms.
Why Are We Out on SPHR?
- Muted 7.6% annual revenue growth over the last five years shows its demand lagged behind its consumer discretionary peers
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $48.38 per share, Sphere Entertainment trades at 10.7x forward EV-to-EBITDA. To fully understand why you should be careful with SPHR, check out our full research report (it’s free).
Integer Holdings (ITGR)
Market Cap: $3.71 billion
With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE: ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.
Why Does ITGR Worry Us?
- Modest revenue base of $1.79 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- 5.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Underwhelming 5.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
Integer Holdings’s stock price of $105.84 implies a valuation ratio of 15.7x forward P/E. Dive into our free research report to see why there are better opportunities than ITGR.
One Stock to Buy:
Badger Meter (BMI)
Market Cap: $5.36 billion
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
Why Will BMI Outperform?
- Market share has increased this cycle as its 17.8% annual revenue growth over the last two years was exceptional
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 32.1% over the last two years outstripped its revenue performance
- Strong free cash flow margin of 15.2% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
Badger Meter is trading at $181.76 per share, or 34.8x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "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 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.
