1 Russell 2000 Stock to Own for Decades and 2 to Brush Off
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 is one Russell 2000 stock that could deliver strong gains and two that may struggle to keep up.
Market Cap: $92.43 million
Known for sponsoring extreme athletes, GoPro (NASDAQ:GPRO) is a camera company known for its POV videos and editing software.
Why Do We Avoid GPRO?
Demand for its offerings was relatively low as its number of cameras sold has underwhelmed
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
GoPro is trading at $0.59 per share, or 3.1x forward P/E. To fully understand why you should be careful with GPRO, check out our full research report (it's free).
Market Cap: $3.40 billion
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ:PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Why Does PLXS Worry Us?
Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.6% annually over the last two years
Earnings per share lagged its peers over the last two years as they only grew by 1.7% annually
Poor free cash flow margin of 2.9% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Plexus's stock price of $129.02 implies a valuation ratio of 17.2x forward P/E. Check out our free in-depth research report to learn more about why PLXS doesn't pass our bar.
Market Cap: $10.33 billion
With a focus on the CFM56 engine that powers Boeing and Airbus's planes, FTAI Aviation (NASDAQ:FTAI) sells, leases, maintains, and repairs aircraft engines.
Why Should You Buy FTAI?
Impressive 44.9% annual revenue growth over the last two years indicates it's winning market share this cycle
Incremental sales over the last two years have been highly profitable as its earnings per share increased by 73.8% annually, topping its revenue gains
Cash-burning tendencies have improved over the last five years, showing it could become financially independent one day
At $100 per share, FTAI Aviation trades at 17.5x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it's free.
Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
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