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.
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 best left off your watchlist.
Two Stocks to Sell:
Hain Celestial (HAIN)
Market Cap: $77.89 million
Sold in over 75 countries around the world, Hain Celestial (NASDAQ: HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.
Why Is HAIN Risky?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- 7× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $0.85 per share, Hain Celestial trades at 40.1x forward P/E. Read our free research report to see why you should think twice about including HAIN in your portfolio.
Viavi Solutions (VIAV)
Market Cap: $9.52 billion
Once known as JDS Uniphase before its 2015 rebranding, Viavi Solutions (NASDAQ: VIAV) provides testing, monitoring and assurance solutions for telecommunications, cloud, enterprise, military, and other critical networks and infrastructure.
Why Do We Think Twice About VIAV?
- Sales trends were unexciting over the last five years as its 2.3% annual growth was below the typical industrials company
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 3.1% annually
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Viavi Solutions is trading at $41.77 per share, or 41x forward P/E. Check out our free in-depth research report to learn more about why VIAV doesn’t pass our bar.
One Stock to Watch:
Maximus (MMS)
Market Cap: $3.78 billion
With nearly 50 years of experience translating public policy into operational programs that serve millions of citizens, Maximus (NYSE: MMS) provides operational services, clinical assessments, and technology solutions to government agencies in the U.S. and internationally.
Why Are We Fans of MMS?
- Annual revenue growth of 8.4% over the last five years beat the sector average and underscores the unique value of its offerings
- Revenue base of $5.37 billion gives it economies of scale and some distribution advantages
- Share buybacks catapulted its annual earnings per share growth to 30.7%, which outperformed its revenue gains over the last two years
Maximus’s stock price of $69.23 implies a valuation ratio of 7.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
