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.
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 be a breakout winner and two that may struggle to keep up.
Two Stocks to Sell:
Box (BOX)
Market Cap: $3.42 billion
Known as the "Content Cloud" for managing the 90% of business data that exists as unstructured files and documents, Box (NYSE: BOX) provides a cloud-based platform that enables organizations to securely manage, share, and collaborate on their content from anywhere on any device.
Why Is BOX Risky?
- Average billings growth of 6.5% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 8.2% for the next 12 months is soft and implies weaker demand
- Operating profits increased over the last year as the company gained some leverage on its fixed costs and became more efficient
At $24.52 per share, Box trades at 2.7x forward price-to-sales. Read our free research report to see why you should think twice about including BOX in your portfolio.
PubMatic (PUBM)
Market Cap: $513.2 million
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Are We Out on PUBM?
- Competitive market dynamics make it difficult to retain customers, leading to a weak 96% net revenue retention rate
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 9.4 percentage points over the next year
PubMatic’s stock price of $11.05 implies a valuation ratio of 1.7x forward price-to-sales. Check out our free in-depth research report to learn more about why PUBM doesn’t pass our bar.
One Stock to Watch:
Matrix Service (MTRX)
Market Cap: $362.4 million
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Are We Fans of MTRX?
- Estimated revenue growth of 12% for the next 12 months implies demand will accelerate from its two-year trend
- Additional sales over the last two years increased its profitability as the 58.2% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin jumped by 8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Matrix Service is trading at $12.89 per share, or 19x 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
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.
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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.
