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.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. 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:
Herbalife (HLF)
Market Cap: $1.75 billion
With the first products sold out of the trunk of the founder’s car, Herbalife (NYSE: HLF) today offers a portfolio of shakes, supplements, personal care products, and weight management programs to help customers reach their nutritional and fitness goals.
Why Is HLF Not Exciting?
- Declining unit sales over the past two years imply it may need to invest in product improvements to get back on track
- Estimated sales growth of 2.9% for the next 12 months is soft and implies weaker demand
- Issuance of new shares over the last three years caused its earnings per share to fall by 15.9% annually, even worse than its revenue declines
Herbalife is trading at $17.08 per share, or 6.2x forward P/E. Dive into our free research report to see why there are better opportunities than HLF.
Atlanticus Holdings (ATLC)
Market Cap: $765.4 million
Using data analytics to serve the millions of Americans with less-than-perfect credit scores, Atlanticus Holdings (NASDAQ: ATLC) provides technology and services that help lenders offer credit products to consumers often overlooked by traditional financing providers.
Why Are We Cautious About ATLC?
- Earnings per share have dipped by 6.2% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- High net-debt-to-EBITDA ratio of 34× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Atlanticus Holdings’s stock price of $50.64 implies a valuation ratio of 6.6x forward P/E. To fully understand why you should be careful with ATLC, check out our full research report (it’s free).
One Stock to Watch:
Fidelis Insurance (FIHL)
Market Cap: $1.95 billion
Founded in Bermuda in 2014 and designed to adapt nimbly to evolving market conditions, Fidelis Insurance (NYSE: FIHL) is a global specialty insurer and reinsurer that provides customized coverage across property, specialty, and bespoke risk solutions.
Why Are We Positive On FIHL?
- Net premiums earned expanded by 17.1% annually over the last two years, demonstrating exceptional market penetration this cycle
- Estimated revenue growth of 8.9% for the next 12 months implies its momentum over the last two years will continue
- Exciting book value per share outlook for the upcoming 12 months calls for 29.1% growth, an acceleration from its two-year trend
At $18.89 per share, Fidelis Insurance trades at 0.8x forward P/B. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. 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 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
