The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on. However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. That said, here is one Russell 2000 stock that could be a breakout winner and two that may face some trouble.
Two Stocks to Sell:
Winnebago (WGO)
Market Cap: $915.8 million
Created to provide high-quality, affordable RVs to the post-war American family, Winnebago (NYSE: WGO) is a manufacturer of recreational vehicles, providing a range of motorhomes, travel trailers, and fifth-wheel products for outdoor and adventure lifestyles.
Why Should You Dump WGO?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 3.7% annually over the last two years
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Winnebago is trading at $32.41 per share, or 12.2x forward P/E. Read our free research report to see why you should think twice about including WGO in your portfolio.
WSFS Financial (WSFS)
Market Cap: $3.62 billion
Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ: WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.
Why Do We Think Twice About WSFS?
- Sales trends were unexciting over the last two years as its 3.2% annual growth was below the typical banking company
- Net interest income is projected to tank by 6.5% over the next 12 months as demand evaporates
- Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 26.9 basis points (100 basis points = 1 percentage point)
At $69.29 per share, WSFS Financial trades at 1.2x forward P/B. Dive into our free research report to see why there are better opportunities than WSFS.
One Stock to Watch:
Donnelley Financial Solutions (DFIN)
Market Cap: $1.3 billion
Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE: DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements.
Why Are We Fans of DFIN?
- Earnings growth was above the peer group average over the last five years as its EPS compounded at 15.7% annually
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
Donnelley Financial Solutions’s stock price of $50.78 implies a valuation ratio of 10.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
