Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Russell 2000 Stocks Facing Headwinds

MCRI Cover Image

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.

Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. Keeping that in mind, here are three Russell 2000 stocks that don’t make the cut and some better choices instead.

Monarch (MCRI)

Market Cap: $1.47 billion

Established in 1993, Monarch (NASDAQ: MCRI) operates luxury casinos and resorts, offering high-end gaming, dining, and hospitality experiences.

Why Does MCRI Fall Short?

  1. Muted 4% annual revenue growth over the last two years shows its demand lagged behind its consumer discretionary peers
  2. Estimated sales growth of 2% for the next 12 months implies demand will slow from its two-year trend
  3. Underwhelming 14.4% return on capital reflects management’s difficulties in finding profitable growth opportunities

Monarch is trading at $79.83 per share, or 8.2x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including MCRI in your portfolio.

Frontdoor (FTDR)

Market Cap: $3.93 billion

Established in 2018 as a spin-off from ServiceMaster Global Holdings, Frontdoor (NASDAQ: FTDR) is a provider of home warranty and service plans.

Why Are We Hesitant About FTDR?

  1. Demand for its offerings was relatively low as its number of home service plans has underwhelmed
  2. Projected 2.4 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
  3. Eroding returns on capital suggest its historical profit centers are aging

At $53.45 per share, Frontdoor trades at 17.5x forward P/E. If you’re considering FTDR for your portfolio, see our FREE research report to learn more.

Interface (TILE)

Market Cap: $1.20 billion

Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ: TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.

Why Is TILE Risky?

  1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
  2. Sales over the last five years were less profitable as its earnings per share fell by 16.7% annually while its revenue was flat
  3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Interface’s stock price of $20.42 implies a valuation ratio of 7.4x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why TILE doesn’t pass our bar.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.

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