1 Russell 2000 Stock with Solid Fundamentals and 2 We Find Risky

August 07, 2025 at 00:32 AM EDT

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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.

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. That said, here is one Russell 2000 stock that could be the next big thing and two that may face some trouble.

Two Stocks to Sell:

Fortrea (FTRE)

Market Cap: $597.5 million

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Why Do We Steer Clear of FTRE?

Customers postponed purchases of its products and services this cycle as its revenue declined by 3.6% annually over the last two years
Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Short cash runway increases the probability of a capital raise that dilutes existing shareholders

At $6.55 per share, Fortrea trades at 10.9x forward P/E. Check out our free in-depth research report to learn more about why FTRE doesn’t pass our bar.

Peoples Bancorp (PEBO)

Market Cap: $986 million

Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ: PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.

Why Does PEBO Fall Short?

Estimated net interest income growth of 1.8% for the next 12 months implies demand will slow from its five-year trend
Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 12% annually
Muted 1.4% annual tangible book value per share growth over the last five years shows its capital generation lagged behind its bank peers

Peoples Bancorp’s stock price of $28.18 implies a valuation ratio of 0.8x forward P/B. Dive into our free research report to see why there are better opportunities than PEBO.

One Stock to Watch:

Braze (BRZE)

Market Cap: $3.03 billion

Founded in 2011 after the co-founders met at NYC Disrupt Hackathon, Braze (NASDAQ: BRZE) is a customer engagement software platform that allows brands to connect with customers through data-driven and contextual marketing campaigns.

Why Could BRZE Be a Winner?

Ability to secure long-term commitments with customers is evident in its 23.1% ARR growth over the last year
Estimated revenue growth of 18.5% for the next 12 months implies its momentum over the last three years will continue
Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage

Braze is trading at $27.33 per share, or 3.9x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 6 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 Comfort Systems (+782% 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

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