The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on. However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.

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 is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.

Two Stocks to Sell:

ANI Pharmaceuticals (ANIP)

Market Cap: $1.69 billion

With a diverse portfolio of 116 pharmaceutical products and a growing rare disease platform, ANI Pharmaceuticals (NASDAQ: ANIP) develops, manufactures, and markets branded and generic prescription pharmaceuticals, with a focus on rare disease treatments.

Why Are We Wary of ANIP?

1. Subscale operations are evident in its revenue base of $826.9 million, meaning it has fewer distribution channels than its larger rivals
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 4.5 percentage points
3. Push for growth has led to negative returns on capital, signaling value destruction

ANI Pharmaceuticals’s stock price of $85.37 implies a valuation ratio of 10.4x forward P/E. Dive into our free research report to see why there are better opportunities than ANIP.

CRA (CRAI)

Market Cap: $1.13 billion

Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.

Why Are We Cautious About CRAI?

1. Revenue base of $731.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Estimated sales growth of 2.7% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin shrank by 9.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $171.44 per share, CRA trades at 19.8x forward P/E. Read our free research report to see why you should think twice about including CRAI in your portfolio.

One Stock to Watch:

Trupanion (TRUP)

Market Cap: $1.59 billion

Born from a vision to help pet owners avoid economic euthanasia when faced with expensive veterinary bills, Trupanion (NASDAQ: TRUP) provides medical insurance for cats and dogs through data-driven, vertically-integrated products priced specifically for each pet's unique characteristics.

Why Does TRUP Catch Our Eye?

1. Impressive 24.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 208% over the last two years outstripped its revenue performance
3. Impressive 16% annual book value per share growth over the last five years indicates it’s building equity value this cycle

Trupanion is trading at $36.57 per share, or 4.2x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. 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-small-cap company Exlservice (+354% 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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