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.
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 are three Russell 2000 stocks that don’t make the cut and some better choices instead.
Tenable (TENB)
Market Cap: $3.23 billion
Starting with the widely-used Nessus vulnerability scanner first released in 1998, Tenable (NASDAQ:TENB) provides exposure management solutions that help organizations identify, assess, and prioritize cybersecurity vulnerabilities across their IT infrastructure and cloud environments.
Why Are We Cautious About TENB?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 10.4% underwhelmed
- Estimated sales growth of 7.1% for the next 12 months implies demand will slow from its two-year trend
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
At $27.29 per share, Tenable trades at 3.2x forward price-to-sales. To fully understand why you should be careful with TENB, check out our full research report (it’s free for active Edge members).
Amneal (AMRX)
Market Cap: $3.62 billion
Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ:AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.
Why Are We Wary of AMRX?
- Free cash flow margin shrank by 1.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Underwhelming 4.1% return on capital reflects management’s difficulties in finding profitable growth opportunities
Amneal is trading at $11.59 per share, or 14.1x forward P/E. Dive into our free research report to see why there are better opportunities than AMRX.
Hope Bancorp (HOPE)
Market Cap: $1.32 billion
With roots in serving Korean-American communities and now expanded to a multi-ethnic clientele across 12 states, Hope Bancorp (NASDAQ:HOPE) operates Bank of Hope, providing commercial and retail banking services with a focus on serving multi-ethnic communities across the United States.
Why Do We Think HOPE Will Underperform?
- Sales tumbled by 11% annually over the last two years, showing market trends are working against its favor during this cycle
- Loans are facing end-market challenges during this cycle, as seen in its flat net interest income over the last five years
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Hope Bancorp’s stock price of $10.37 implies a valuation ratio of 0.6x forward P/B. If you’re considering HOPE for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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 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 Comfort Systems (+782% 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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