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.
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 are three Russell 2000 stocks that don’t make the cut and some better choices instead.
Semtech (SMTC)
Market Cap: $7.86 billion
A public company since the late 1960s, Semtech (NASDAQ: SMTC) is a provider of analog and mixed-signal semiconductors used for Internet of Things systems and cloud connectivity.
Why Do We Avoid SMTC?
- Historical operating margin losses have deepened over the last five years as it prioritized growth over profits
- Lacking free cash flow margin got worse over the last five years as its investment needs accelerated
- Negative returns on capital show management lost money while trying to expand the business, and its falling returns suggest its earlier profit pools are drying up
Semtech is trading at $85.03 per share, or 44.1x forward P/E. If you’re considering SMTC for your portfolio, see our FREE research report to learn more.
Bel Fuse (BELFA)
Market Cap: $2.88 billion
Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ: BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.
Why Does BELFA Give Us Pause?
- 2.7% annual revenue growth over the last two years was slower than its industrials peers
- Earnings growth underperformed the sector average over the last one years as its EPS grew by just 7.9% annually
Bel Fuse’s stock price of $215.30 implies a valuation ratio of 28.1x forward P/E. To fully understand why you should be careful with BELFA, check out our full research report (it’s free).
QCR Holdings (QCRH)
Market Cap: $1.53 billion
With roots dating back to 1993 and a name reflecting its original Quad Cities market, QCR Holdings (NASDAQGM:QCRH) operates four community banks across Iowa and Missouri, providing commercial, consumer banking, and trust services to businesses and individuals.
Why Do We Think Twice About QCRH?
- Muted 3.7% annual revenue growth over the last two years shows its demand lagged behind its banking peers
- Muted 8.9% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5.8% annually
At $91.82 per share, QCR Holdings trades at 1.2x forward P/B. Read our free research report to see why you should think twice about including QCRH in your portfolio.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check 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 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
