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 be the next big thing and two best left off your watchlist.
Two Stocks to Sell:
National Vision (EYE)
Market Cap: $1.82 billion
Operating under multiple brands, National Vision (NYSE: EYE) sells optical products such as eyeglasses and provides optical services such as eye exams.
Why Do We Pass on EYE?
- Store closures demonstrate a defensive approach to eliminating underperforming locations
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
National Vision’s stock price of $23 implies a valuation ratio of 38.1x forward P/E. If you’re considering EYE for your portfolio, see our FREE research report to learn more.
Sinclair (SBGI)
Market Cap: $909.3 million
With over 2,400 hours of local news produced weekly and 640 broadcast channels reaching millions of American homes, Sinclair (NASDAQ: SBGI) operates a network of 185 local television stations across 86 U.S. markets, producing news programming and distributing content from major networks.
Why Do We Think SBGI Will Underperform?
- Sales tumbled by 7.2% annually over the last five years, showing market trends are working against its favor during this cycle
- Sales are projected to tank by 9.2% over the next 12 months as demand evaporates
- Earnings per share fell by 25.1% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
At $13.07 per share, Sinclair trades at 2.1x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SBGI in your portfolio.
One Stock to Watch:
Astronics (ATRO)
Market Cap: $1.19 billion
Integrating power outlets into many Boeing aircraft, Astronics (NASDAQ: ATRO) is a provider of technologies and services to the global aerospace, defense, and electronics industries.
Why Could ATRO Be a Winner?
- Annual revenue growth of 19.1% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 81.3% annually, topping its revenue gains
- Historical investments are beginning to pay off as its returns on capital are growing
Astronics is trading at $34.32 per share, or 21.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
