The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential. However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. 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:
CoreCivic (CXW)
Market Cap: $2.13 billion
Originally founded in 1983 as the first private prison company in the United States, CoreCivic (NYSE: CXW) operates correctional facilities, detention centers, and residential reentry programs for government agencies across the United States.
Why Does CXW Fall Short?
- 4.6% annual revenue growth over the last five years was slower than its business services peers
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.2 percentage points
- 6.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
CoreCivic is trading at $21.49 per share, or 0.8x forward price-to-sales. If you’re considering CXW for your portfolio, see our FREE research report to learn more.
TETRA Technologies (TTI)
Market Cap: $1.41 billion
Operating across six continents with approximately 40,000 acres of mineral-rich brine leases in Arkansas, TETRA Technologies (NYSE: TTI) provides well completion fluids and water management services to oil and gas operators.
Why Do We Avoid TTI?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.7% annually over the last ten years
- Subscale operations are evident in its revenue base of $630 million, meaning it has fewer distribution channels than its larger rivals
- Gross margin of 29.1% reflects its high production costs and unfavorable asset base
At $10.40 per share, TETRA Technologies trades at 41.2x forward P/E. Read our free research report to see why you should think twice about including TTI in your portfolio.
One Stock to Watch:
Magnolia Oil & Gas (MGY)
Market Cap: $5.41 billion
Operating over 600,000 net acres primarily in two distinct South Texas regions, Magnolia Oil & Gas (NYSE: MGY) drills and produces oil, natural gas, and natural gas liquids from South Texas formations.
Why Are We Positive On MGY?
- Annual revenue growth of 18.7% 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 84.6%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Magnolia Oil & Gas’s stock price of $29.50 implies a valuation ratio of 9.9x 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
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
