The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential. However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
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 face some trouble.
Two Stocks to Sell:
Simply Good Foods (SMPL)
Market Cap: $2.01 billion
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ: SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Why Do We Think SMPL Will Underperform?
- Subscale operations are evident in its revenue base of $1.45 billion, meaning it has fewer distribution channels than its larger rivals
- Demand will likely fall over the next 12 months as Wall Street expects flat revenue
- Free cash flow margin shrank by 4.9 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
At $20.35 per share, Simply Good Foods trades at 10.5x forward P/E. If you’re considering SMPL for your portfolio, see our FREE research report to learn more.
Atkore (ATKR)
Market Cap: $2.13 billion
Protecting the things that power our world, Atkore (NYSE: ATKR) designs and manufactures electrical safety products.
Why Is ATKR Risky?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- 7 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Eroding returns on capital suggest its historical profit centers are aging
Atkore is trading at $63.25 per share, or 12.2x forward P/E. To fully understand why you should be careful with ATKR, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
Granite Construction (GVA)
Market Cap: $5.04 billion
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Why Does GVA Stand Out?
- Annual revenue growth of 12.2% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 43% annually, topping its revenue gains
- Free cash flow margin expanded by 5.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Granite Construction’s stock price of $115.35 implies a valuation ratio of 19.3x forward P/E. 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.
