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.
Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. That said, here is one Russell 2000 stock that could deliver strong gains and two best left off your watchlist.
Two Stocks to Sell:
EVgo (EVGO)
Market Cap: $419.1 million
Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.
Why Are We Wary of EVGO?
- Poor expense management has led to operating margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $3.14 per share, EVgo trades at 16.7x forward EV-to-EBITDA. If you’re considering EVGO for your portfolio, see our FREE research report to learn more.
PennyMac Mortgage Investment Trust (PMT)
Market Cap: $1.12 billion
Operating as a real estate investment trust since 2009 to maintain tax advantages, PennyMac Mortgage Investment Trust (NYSE:PMT) is a specialty finance company that invests in mortgage-related assets and operates a correspondent lending business.
Why Do We Pass on PMT?
- Sales tumbled by 21.6% annually over the last five years, showing market trends are working against its favor during this cycle
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 5.2% annually over the last five years
PennyMac Mortgage Investment Trust’s stock price of $12.88 implies a valuation ratio of 0.8x forward P/B. Dive into our free research report to see why there are better opportunities than PMT.
One Stock to Watch:
Inter Parfums (IPAR)
Market Cap: $2.59 billion
With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ:IPAR) manufactures and distributes fragrances worldwide.
Why Are We Fans of IPAR?
- Annual revenue growth of 14.1% over the last three years beat the sector average and underscores the popularity of its brand
- Products command premium prices and result in a premier gross margin of 56%
- ROIC punches in at 28.5%, illustrating management’s expertise in identifying profitable investments
Inter Parfums is trading at $80.82 per share, or 17.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
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 9 Market-Beating Stocks. 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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