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.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. Keeping that in mind, here is one Russell 2000 stock that could deliver strong gains and two best left off your watchlist.
Two Stocks to Sell:
Lake City Bank (LKFN)
Market Cap: $1.44 billion
Dating back to 1872 and deeply rooted in Indiana's communities, Lakeland Financial Corporation (NASDAQ: LKFN) operates Lake City Bank, providing commercial and consumer banking services throughout Northern and Central Indiana.
Why Are We Cautious About LKFN?
- Muted 2.6% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- Muted 6.5% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Incremental sales over the last five years were less profitable as its 3.5% annual earnings per share growth lagged its revenue gains
Lake City Bank’s stock price of $56.43 implies a valuation ratio of 1.9x forward P/B. Dive into our free research report to see why there are better opportunities than LKFN.
Byline Bancorp (BY)
Market Cap: $1.33 billion
Ranking as the fifth most active Small Business Administration lender in the country, Byline Bancorp (NYSE: BY) is a Chicago-based bank that provides banking services to small and medium-sized businesses, commercial real estate developers, and consumers.
Why Are We Wary of BY?
- 7.7% annual revenue growth over the last two years was slower than its banking peers
- 21.3 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position
- Annual earnings per share growth of 2.3% underperformed its revenue over the last two years, showing its incremental sales were less profitable
Byline Bancorp is trading at $29.05 per share, or 1.1x forward P/B. If you’re considering BY for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Huron (HURN)
Market Cap: $2.73 billion
Founded in 2002 during a time of significant regulatory change in corporate America, Huron Consulting Group (NASDAQ: HURN) is a professional services company that helps organizations develop growth strategies, optimize operations, and implement digital transformation solutions.
Why Are We Backing HURN?
- Impressive 12.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Free cash flow margin increased by 9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Historical investments are beginning to pay off as its returns on capital are growing
At $170.89 per share, Huron trades at 20.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 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-micro-cap company Kadant (+351% 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.
