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 are two Russell 2000 stocks that could be the next big thing and one that may struggle to keep up.
One Stock to Sell:
Lincoln Educational (LINC)
Market Cap: $616.6 million
Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.
Why Should You Dump LINC?
- Number of enrolled students has disappointed over the past two years, indicating weak demand for its offerings
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Eroding returns on capital suggest its historical profit centers are aging
Lincoln Educational is trading at $19.50 per share, or 9.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including LINC in your portfolio.
Two Stocks to Watch:
WD-40 (WDFC)
Market Cap: $2.99 billion
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ:WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Do We Watch WDFC?
- Products command premium prices and result in a stellar gross margin of 53.8%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
WD-40’s stock price of $220.84 implies a valuation ratio of 37.2x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Republic Bancorp (RBCAA)
Market Cap: $1.42 billion
With roots dating back to 1974 and operating across multiple states including Kentucky, Indiana, Florida, Ohio, and Tennessee, Republic Bancorp (NASDAQGS:RBCA.A) is a Kentucky-based financial holding company that operates a bank offering traditional banking, mortgage services, and specialized financial products.
Why Do We Like RBCAA?
- Annual revenue growth of 10.3% over the past two years was outstanding, reflecting market share gains this cycle
- Differentiated product suite results in a Strong performance of its loan book is reflected in its High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 5%
- Additional sales over the last two years increased its profitability as the 13.2% annual growth in its earnings per share outpaced its revenue
At $72.54 per share, Republic Bancorp trades at 1.3x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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