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:
American Woodmark (AMWD)
Market Cap: $775.5 million
Starting as a small millwork shop, American Woodmark (NASDAQ:AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
Why Should You Sell AMWD?
- Sales tumbled by 9.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Forecasted revenue decline of 3.1% for the upcoming 12 months implies demand will fall even further
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
American Woodmark’s stock price of $53.16 implies a valuation ratio of 11.7x forward P/E. To fully understand why you should be careful with AMWD, check out our full research report (it’s free for active Edge members).
Scorpio Tankers (STNG)
Market Cap: $2.97 billion
Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.
Why Does STNG Give Us Pause?
- Sales tumbled by 2.9% annually over the last five years, showing market trends are working against its favor during this cycle
- Sluggish trends in its total vessels suggest customers aren’t adopting its solutions as quickly as the company hoped
- Earnings per share have contracted by 37.6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
At $63.09 per share, Scorpio Tankers trades at 10.3x forward P/E. Read our free research report to see why you should think twice about including STNG in your portfolio.
One Stock to Buy:
First Financial Bankshares (FFIN)
Market Cap: $4.46 billion
With roots dating back to 1890 and a network spanning over 70 locations across the Lone Star State, First Financial Bankshares (NASDAQ:FFIN) is a Texas-focused regional bank providing commercial banking, trust services, and wealth management across numerous communities throughout the state.
Why Is FFIN a Top Pick?
- Net interest margin jumped by 50 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more resources to pursue growth initiatives
- Earnings per share grew by 6.5% annually over the last two years, massively outpacing its peers
- Annual tangible book value per share growth of 27.8% over the last two years was superb and indicates its capital strength increased during this cycle
First Financial Bankshares is trading at $31.37 per share, or 2.4x forward P/B. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. 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 (+1,545% 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
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