1 Russell 2000 Stock with Solid Fundamentals and 2 to Keep Off Your Radar

Yahoo

03-06-2025

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. That said, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.
Market Cap: $1.21 billion
A pioneer in connected home audio systems, Sonos (NASDAQ:SONO) offers a range of premium wireless speakers and sound systems.
Why Should You Dump SONO?
Annual revenue declines of 6.3% over the last two years indicate problems with its market positioning
Poor expense management has led to operating margin losses
Negative returns on capital show management lost money while trying to expand the business
At $10.01 per share, Sonos trades at 48x forward P/E. If you're considering SONO for your portfolio, see our FREE research report to learn more.
Market Cap: $2.20 billion
Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ:CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.
Why Are We Wary of CCOI?
Free cash flow margin shrank by 37.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Eroding returns on capital suggest its historical profit centers are aging
Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Cogent is trading at $46.90 per share, or 6.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including CCOI in your portfolio, it's free.
Market Cap: $931.4 million
Transforming how doctors care for seniors by shifting financial incentives from volume to outcomes, agilon health (NYSE:AGL) provides a platform that helps primary care physicians transition to value-based care models for Medicare patients through long-term partnerships and global capitation arrangements.
Why Do We Like AGL?
Market share has increased this cycle as its 40.5% annual revenue growth over the last two years was exceptional
Average customer growth of 34.7% over the past two years demonstrates success in acquiring new clients that could increase their spending in the future
Earnings per share grew by 14.5% annually over the last three years and trumped its peers
agilon health's stock price of $2.27 implies a valuation ratio of 0.2x forward price-to-sales. Is now the time to initiate a position? 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 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.
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