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.
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 deliver strong gains and two that may struggle to keep up.
Two Stocks to Sell:
Accel Entertainment (ACEL)
Market Cap: $1.09 billion
Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.
Why Should You Sell ACEL?
- Sluggish trends in its video gaming terminals sold suggest customers aren’t adopting its solutions as quickly as the company hoped
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Accel Entertainment’s stock price of $13.21 implies a valuation ratio of 14.2x forward P/E. If you’re considering ACEL for your portfolio, see our FREE research report to learn more.
Ruger (RGR)
Market Cap: $626.6 million
Founded in 1949, Ruger (NYSE: RGR) is an American manufacturer of firearms for the commercial sporting market.
Why Do We Steer Clear of RGR?
- Products and services aren’t resonating with the market as its revenue declined by 2.6% annually over the last five years
- Low free cash flow margin of 7.5% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Ruger is trading at $39.01 per share, or 1.2x trailing 12-month price-to-sales. Check out our free in-depth research report to learn more about why RGR doesn’t pass our bar.
One Stock to Watch:
Old Second Bancorp (OSBC)
Market Cap: $1.14 billion
Dating back to 1871 as one of the Chicago area's longest-standing financial institutions, Old Second Bancorp (NASDAQ: OSBC) is an Illinois-based community bank offering deposit services, commercial and consumer loans, wealth management, and mortgage products through its 53 branch locations.
Why Do We Like OSBC?
- Annual revenue growth of 21.5% over the past five years was outstanding, reflecting market share gains this cycle
- Market share has increased this cycle as its 27.4% annual net interest income growth over the last five years was exceptional
- High-yielding loan book and low cost of funds result in a best-in-class net interest margin of 4.9%
At $22.51 per share, Old Second Bancorp trades at 1.2x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
