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 is one Russell 2000 stock that could be the next big thing and two best left off your watchlist.
Two Stocks to Sell:
Shoe Carnival (SCVL)
Market Cap: $566.1 million
Known for its playful atmosphere that features carnival elements, Shoe Carnival (NASDAQ: SCVL) is a retailer that sells footwear from mainstream brands for the entire family.
Why Is SCVL Risky?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Smaller revenue base of $1.14 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
Shoe Carnival’s stock price of $20.03 implies a valuation ratio of 13.3x forward P/E. If you’re considering SCVL for your portfolio, see our FREE research report to learn more.
Ocular Therapeutix (OCUL)
Market Cap: $2.09 billion
Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ: OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.
Why Should You Dump OCUL?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.7% annually over the last two years
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 340.5 percentage points
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 264.1 percentage points
Ocular Therapeutix is trading at $9.56 per share, or 38.1x forward price-to-sales. Read our free research report to see why you should think twice about including OCUL in your portfolio.
One Stock to Watch:
Astrana Health (ASTH)
Market Cap: $1.05 billion
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ: ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Why Could ASTH Be a Winner?
- Annual revenue growth of 47.7% over the last two years was superb and indicates its market share increased during this cycle
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 11.6% annually
At $20.91 per share, Astrana Health trades at 6.3x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
