1 Russell 2000 Stock for Long-Term Investors and 2 to Be Wary Of

Yahoo

23-05-2025

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. Keeping that in mind, here is one Russell 2000 stock that could deliver strong gains and two that may face some trouble.
Market Cap: $1.21 billion
Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE:TDOC) is a telemedicine platform that facilitates remote doctor's visits.
Why Is TDOC Not Exciting?
Sales trends were unexciting over the last three years as its 6% annual growth was below the typical consumer internet company
Focus on expanding its platform came at the expense of monetization as its average revenue per user fell by 5.3% annually
Estimated sales decline of 1.3% for the next 12 months implies a challenging demand environment
At $6.92 per share, Teladoc trades at 4x forward EV/EBITDA. If you're considering TDOC for your portfolio, see our FREE research report to learn more.
Market Cap: $5.40 billion
Established with a commitment to supporting national security, Kratos (NASDAQ:KTOS) is a provider of advanced engineering, technology, and security solutions tailored for critical national security applications.
Why Does KTOS Worry Us?
7 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 from an already low base indicate that management's recent investments are destroying value
Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Kratos is trading at $35.38 per share, or 64.8x forward P/E. Dive into our free research report to see why there are better opportunities than KTOS.
Market Cap: $5.63 billion
Founded in 2001, Construction Partners (NASDAQ:ROAD) is a civil infrastructure company that builds and maintains roads, highways, and other infrastructure projects.
Why Are We Bullish on ROAD?
Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 40.3%
Earnings per share have massively outperformed its peers over the last two years, increasing by 91% annually
Free cash flow margin didn't grow over the last five years
Construction Partners's stock price of $100.85 implies a valuation ratio of 42.6x forward P/E. Is now the right time to buy? See for yourself in our full research report, it's free.
Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.