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. Keeping that in mind, here are two Russell 2000 stocks that could be the next breakout winners and one best left off your watchlist.
One Stock to Sell:
Tecnoglass (TGLS)
Market Cap: $2.44 billion
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE:TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Are We Hesitant About TGLS?
- Annual revenue growth of 7.3% over the last two years was below our standards for the industrials sector
- Earnings per share have dipped by 3.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- 10.4 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
At $52.47 per share, Tecnoglass trades at 13.3x forward P/E. To fully understand why you should be careful with TGLS, check out our full research report (it’s free).
Two Stocks to Watch:
Impinj (PI)
Market Cap: $5.05 billion
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ:PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Does PI Catch Our Eye?
- Annual revenue growth of 20.2% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 49.4% annually, topping its revenue gains
- Free cash flow margin jumped by 15.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Impinj is trading at $168.75 per share, or 59x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
DXP (DXPE)
Market Cap: $2.00 billion
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.
Why Is DXPE a Good Business?
- Annual revenue growth of 13% over the last five years was superb and indicates its market share increased during this cycle
- Operating margin improvement of 5.1 percentage points over the last five years demonstrates its ability to scale efficiently
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
DXP’s stock price of $128.07 implies a valuation ratio of 20x forward P/E. Is now a good time to buy? 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.