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.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. Keeping that in mind, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.
Two Stocks to Sell:
Angi (ANGI)
Market Cap: $210.3 million
Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.
Why Does ANGI Give Us Pause?
- Value proposition isn’t resonating strongly as its service requests averaged 19.2% drops over the last two years
- Sales are projected to tank by 4% over the next 12 months as its demand continues evaporating
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
Angi is trading at $5.13 per share, or 4.1x forward EV/EBITDA. Check out our free in-depth research report to learn more about why ANGI doesn’t pass our bar.
CVB Financial (CVBF)
Market Cap: $3.50 billion
With roots dating back to 1974 and a focus on serving small and medium-sized businesses, CVB Financial (NASDAQ: CVBF) operates Citizens Business Bank, providing banking, lending, and trust services to businesses and individuals across California.
Why Do We Think CVBF Will Underperform?
- Sales tumbled by 2% annually over the last two years, showing market trends are working against its favor during this cycle
- Muted 2% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Earnings per share have contracted by 2.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
CVB Financial’s stock price of $19.88 implies a valuation ratio of 1.1x forward P/B. If you’re considering CVBF for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
SM Energy (SM)
Market Cap: $8.23 billion
Operating across three key regions with over 328,000 net acres under its control, SM Energy (NYSE: SM) explores for, develops, and produces oil, natural gas, and natural gas liquids primarily from shale formations in Texas and Utah.
Why Do We Love SM?
- Annual revenue growth of 25.5% over the past five years was outstanding, reflecting market share gains this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 87.2%
- EBITDA margin expanded by 18 percentage points over the last five years as it scaled and became more efficient
At $34.41 per share, SM Energy trades at 4.4x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
