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. 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:
Employers Holdings (EIG)
Market Cap: $820.2 million
With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE: EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.
Why Do We Think EIG Will Underperform?
- 2.7% annualized net premiums earned growth over the last two years lagged behind its insurance peers
- Expenses have increased as a percentage of revenue over the last five years as its pre-tax profit margin fell by 19.4 percentage points
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 21.9% annually
At $42.09 per share, Employers Holdings trades at 0.8x forward P/B. If you’re considering EIG for your portfolio, see our FREE research report to learn more.
Atlanticus Holdings (ATLC)
Market Cap: $825.8 million
Using data analytics to serve the millions of Americans with less-than-perfect credit scores, Atlanticus Holdings (NASDAQ: ATLC) provides technology and services that help lenders offer credit products to consumers often overlooked by traditional financing providers.
Why Are We Wary of ATLC?
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
Atlanticus Holdings’s stock price of $55.40 implies a valuation ratio of 6x forward P/E. To fully understand why you should be careful with ATLC, check out our full research report (it’s free).
One Stock to Buy:
Oscar Health (OSCR)
Market Cap: $3.80 billion
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
Why Is OSCR a Good Business?
- Annual revenue growth of 41.2% over the last two years was superb and indicates its market share increased during this cycle
- Adjusted operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Free cash flow margin jumped by 16.7 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Oscar Health is trading at $12.88 per share, or 30.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
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 for 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.
