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 the next big thing and two that may struggle to keep up.
Two Stocks to Sell:
Jack in the Box (JACK)
Market Cap: $365.3 million
Delighting customers since its inception in 1951, Jack in the Box (NASDAQ: JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.
Why Should You Dump JACK?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 6.5 percentage points
- 11× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Jack in the Box’s stock price of $19.21 implies a valuation ratio of 5.1x forward P/E. If you’re considering JACK for your portfolio, see our FREE research report to learn more.
QuidelOrtho (QDEL)
Market Cap: $1.89 billion
Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ: QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.
Why Do We Avoid QDEL?
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- Free cash flow margin dropped by 27.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
QuidelOrtho is trading at $28.01 per share, or 13.1x forward P/E. To fully understand why you should be careful with QDEL, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Astrana Health (ASTH)
Market Cap: $1.14 billion
Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ: ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.
Why Are We Fans of ASTH?
- Impressive 47.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Revenue outlook for the upcoming 12 months is outstanding and shows it’s on track to gain market share
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 11.6% annually
At $22.41 per share, Astrana Health trades at 4.3x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 Exlservice (+354% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
