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.
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 be a breakout winner and two that may struggle to keep up.
Two Stocks to Sell:
Krispy Kreme (DNUT)
Market Cap: $618.3 million
Famous for its Original Glazed doughnuts and parent company of Insomnia Cookies, Krispy Kreme (NASDAQ:DNUT) is one of the most beloved and well-known fast-food chains in the world.
Why Should You Dump DNUT?
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $3.58 per share, Krispy Kreme trades at 36x forward P/E. Check out our free in-depth research report to learn more about why DNUT doesn’t pass our bar.
Advanced Energy (AEIS)
Market Cap: $5.23 billion
Pioneering technologies for radio frequency power delivery, Advanced Energy (NASDAQ:AEIS) provides power supplies, thermal management systems, and measurement and control instruments for various manufacturing processes.
Why Do We Pass on AEIS?
- Sales tumbled by 8.8% annually over the last two years, showing market trends are working against its favor during this cycle
- 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
- Eroding returns on capital suggest its historical profit centers are aging
Advanced Energy is trading at $139 per share, or 27.8x forward P/E. Dive into our free research report to see why there are better opportunities than AEIS.
One Stock to Watch:
Tecnoglass (TGLS)
Market Cap: $3.67 billion
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE:TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Do We Like TGLS?
- Annual revenue growth of 17.5% over the past five years was outstanding, reflecting market share gains this cycle
- Excellent operating margin of 27.3% highlights the efficiency of its business model, and it turbocharged its profits by achieving some fixed cost leverage
- Earnings per share grew by 47.3% annually over the last five years, massively outpacing its peers
Tecnoglass’s stock price of $78.03 implies a valuation ratio of 18.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. 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 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.