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 be a breakout winner and two that may struggle to keep up.
Two Stocks to Sell:
Oxford Industries (OXM)
Market Cap: $604.9 million
The parent company of Tommy Bahama, Oxford Industries (NYSE: OXM) is a lifestyle fashion conglomerate with brands that embody outdoor happiness.
Why Should You Sell OXM?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Poor free cash flow margin of 3% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $40.66 per share, Oxford Industries trades at 17.7x forward P/E. To fully understand why you should be careful with OXM, check out our full research report (it’s free).
UFP Technologies (UFPT)
Market Cap: $2.01 billion
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ: UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
Why Is UFPT Not Exciting?
- Subscale operations are evident in its revenue base of $598 million, meaning it has fewer distribution channels than its larger rivals
- Estimated sales growth of 4.6% for the next 12 months implies demand will slow from its two-year trend
UFP Technologies is trading at $260.14 per share, or 25.5x forward P/E. Dive into our free research report to see why there are better opportunities than UFPT.
One Stock to Watch:
Urban Outfitters (URBN)
Market Cap: $6.23 billion
Founded as a purveyor of vintage items, Urban Outfitters (NASDAQ: URBN) now largely sells new apparel and accessories to teens and young adults seeking on-trend fashion.
Why Does URBN Stand Out?
- Comparable store sales rose by 4.6% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Projected revenue growth of 8.5% over the next 12 months is higher than most peers
- Share repurchases have increased shareholder returns as its annual earnings per share growth of 41.8% exceeded its revenue gains over the last three years
Urban Outfitters’s stock price of $70.18 implies a valuation ratio of 12.6x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
