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. Keeping that in mind, here is one Russell 2000 stock that could deliver strong gains and two that may face some trouble.

Two Stocks to Sell:

UniFirst (UNF)

Market Cap: $2.88 billion

With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE: UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.

Why Does UNF Give Us Pause?

1. Annual revenue growth of 4.4% over the last two years was below our standards for the business services sector
2. Earnings per share lagged its peers over the last five years as they only grew by 2.3% annually
3. ROIC of 7.5% reflects management’s challenges in identifying attractive investment opportunities, and its falling returns suggest its earlier profit pools are drying up

UniFirst is trading at $159.25 per share, or 22.6x forward P/E. Check out our free in-depth research report to learn more about why UNF doesn’t pass our bar.

Sezzle (SEZL)

Market Cap: $1.76 billion

Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ: SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.

Why Are We Cautious About SEZL?

1. Negative return on equity shows that some of its growth strategies have backfired

Sezzle’s stock price of $51.00 implies a valuation ratio of 12.3x forward P/E. To fully understand why you should be careful with SEZL, check out our full research report (it’s free for active Edge members).

One Stock to Watch:

WSFS Financial (WSFS)

Market Cap: $2.90 billion

Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ: WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.

Why Are We Positive On WSFS?

1. Annual revenue growth of 10% over the past five years was outstanding, reflecting market share gains this cycle
2. Incremental sales over the last five years have been highly profitable as its earnings per share increased by 23.2% annually, topping its revenue gains
3. Impressive 25.5% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle

At $53.64 per share, WSFS Financial trades at 1x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

Stocks We Like Even More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. 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 Tecnoglass (+1,754% 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.