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. That said, here is one Russell 2000 stock that could deliver strong gains and two that may face some trouble.
Two Stocks to Sell:
Domo (DOMO)
Market Cap: $166.1 million
Named for the Japanese word meaning "thank you very much," Domo (NASDAQ: DOMO) provides a cloud-based business intelligence platform that connects people with real-time data and insights across organizations.
Why Do We Avoid DOMO?
- Offerings struggled to generate meaningful interest as its average billings growth of 2% over the last year did not impress
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
At $3.68 per share, Domo trades at 0.5x forward price-to-sales. Read our free research report to see why you should think twice about including DOMO in your portfolio.
Fulton Financial (FULT)
Market Cap: $4.00 billion
Tracing its roots back to 1882 in the heart of Pennsylvania, Fulton Financial (NASDAQ: FULT) is a financial holding company that provides banking, lending, and wealth management services to consumers and businesses across five Mid-Atlantic states.
Why Does FULT Worry Us?
- 8.9% annual revenue growth over the last five years was slower than its banking peers
- Performance over the past five years shows its incremental sales were less profitable, as its 6.6% annual earnings per share growth trailed its revenue gains
- Projected tangible book value per share growth of 9.8% for the next 12 months suggests sluggish capital generation
Fulton Financial’s stock price of $21.03 implies a valuation ratio of 1.1x forward P/B. Check out our free in-depth research report to learn more about why FULT doesn’t pass our bar.
One Stock to Watch:
Magnite (MGNI)
Market Cap: $1.92 billion
Born from the 2020 merger of Rubicon Project and Telaria, Magnite (NASDAQ: MGNI) operates the world's largest independent sell-side advertising platform that automates the buying and selling of digital advertising inventory across all channels and formats.
Why Could MGNI Be a Winner?
- Annual revenue growth of 24% over the last five years was superb and indicates its market share increased during this cycle
- Earnings per share have massively outperformed its peers over the last two years, increasing by 25.8% annually
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Magnite is trading at $13.25 per share, or 2.3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
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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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
