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.
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 face some trouble.
Two Stocks to Sell:
Lumen (LUMN)
Market Cap: $7.63 billion
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE: LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Why Is LUMN Risky?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9.7% annually over the last five years
- Sales were less profitable over the last five years as its earnings per share fell by 15.8% annually, worse than its revenue declines
- Free cash flow margin shrank by 10.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Lumen’s stock price of $7.74 implies a valuation ratio of 7.5x forward EV-to-EBITDA. To fully understand why you should be careful with LUMN, check out our full research report (it’s free).
Renasant (RNST)
Market Cap: $3.69 billion
Founded in 1904 during a time when the South was rebuilding its economy, Renasant (NYSE: RNST) is a regional bank holding company that offers banking, wealth management, insurance, and specialized lending services throughout the Southeast.
Why Are We Hesitant About RNST?
- Sales trends were unexciting over the last five years as its 8.1% annual growth was below the typical banking company
- Earnings per share fell by 2.1% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- 3.7% annual tangible book value per share growth over the last two years was slower than its banking peers
Renasant is trading at $38.96 per share, or 0.9x forward P/B. Read our free research report to see why you should think twice about including RNST in your portfolio.
One Stock to Buy:
MediaAlpha (MAX)
Market Cap: $504.2 million
Powering nearly 10 million consumer referrals each month in the insurance marketplace, MediaAlpha (NYSE: MAX) operates a technology platform that connects insurance carriers with high-intent consumers shopping for property, casualty, health, and life insurance products.
Why Do We Love MAX?
- Annual revenue growth of 69.4% over the last two years was superb and indicates its market share increased during this cycle
- Forecasted revenue growth of 11.8% for the next 12 months indicates its momentum over the last two years is sustainable
- Additional sales over the last two years increased its profitability as the 578% annual growth in its earnings per share outpaced its revenue
At $9.63 per share, MediaAlpha trades at 7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even 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 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.
