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 is one Russell 2000 stock that could deliver strong gains and two best left off your watchlist.
Two Stocks to Sell:
Tri Pointe Homes (TPH)
Market Cap: $2.77 billion
Established in 2009 in California, Tri Pointe Homes (NYSE: TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Why Are We Out on TPH?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 11.2% declines over the past two years
- Projected sales decline of 17.8% over the next 12 months indicates demand will continue deteriorating
- Sales were less profitable over the last two years as its earnings per share fell by 7.5% annually, worse than its revenue declines
At $33.65 per share, Tri Pointe Homes trades at 14x forward P/E. Dive into our free research report to see why there are better opportunities than TPH.
ICU Medical (ICUI)
Market Cap: $3.67 billion
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Do We Pass on ICUI?
- Muted 1.5% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Sales are projected to tank by 8.5% over the next 12 months as demand evaporates
- Free cash flow margin dropped by 11.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
ICU Medical’s stock price of $152.60 implies a valuation ratio of 20x forward P/E. Check out our free in-depth research report to learn more about why ICUI doesn’t pass our bar.
One Stock to Watch:
Warby Parker (WRBY)
Market Cap: $2.29 billion
Founded in 2010, Warby Parker (NYSE: WRBY) designs, manufactures, and sells eyewear, including prescription glasses, sunglasses, and contact lenses, through its e-commerce platform and physical retail locations.
Why Are We Positive On WRBY?
- Fast expansion of new stores indicates an aggressive approach to attacking untapped market opportunities
- Expected revenue growth of 12.9% for the next year suggests its market share will rise
- Earnings per share grew by 72.3% annually over the last three years, massively outpacing its peers
Warby Parker is trading at $19.75 per share, or 42x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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