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. Keeping that in mind, here is one Russell 2000 stock that could be the next big thing and two best left off your watchlist.
Two Stocks to Sell:
Inter Parfums (IPAR)
Market Cap: $3.59 billion
With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ: IPAR) manufactures and distributes fragrances worldwide.
Why Does IPAR Worry Us?
- Subscale operations are evident in its revenue base of $1.50 billion, meaning it has fewer distribution channels than its larger rivals
- Estimated sales growth of 2% for the next 12 months implies demand will slow from its three-year trend
- Efficiency has decreased over the last year as its operating margin fell by 1.7 percentage points
At $112.06 per share, Inter Parfums trades at 22.9x forward P/E. Read our free research report to see why you should think twice about including IPAR in your portfolio.
Payoneer (PAYO)
Market Cap: $2.42 billion
Founded during the early days of global e-commerce in 2005 to solve international payment challenges, Payoneer (NASDAQ: PAYO) provides financial technology services that enable small and medium-sized businesses to send and receive payments globally across borders.
Why Are We Wary of PAYO?
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 5.2% annually while its revenue grew
- Underwhelming 7.9% return on equity reflects management’s difficulties in finding profitable growth opportunities
Payoneer is trading at $7.14 per share, or 18.9x forward P/E. If you’re considering PAYO for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Upstart (UPST)
Market Cap: $2.54 billion
Using over 2,500 data variables and trained on nearly 82 million repayment events, Upstart (NASDAQ: UPST) is an AI-powered lending platform that uses machine learning to help banks and credit unions more accurately assess borrower risk for personal loans, auto loans, and home equity lines of credit.
Why Do We Love UPST?
- Loan originations on its platform are soaring as they averaged 54.3% growth over the last year, enabling the company to collect more fees and expand into new markets like credit cards.
- Expected revenue growth of 30.9% for the next year suggests its market share will rise
- Free cash flow is expected to be positive next year, indicating the company is at a pivotal stage in its life
Upstart’s stock price of $26.13 implies a valuation ratio of 1.7x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
