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. Keeping that in mind, here are two Russell 2000 stocks that could deliver strong gains and one best left off your watchlist.

One Stock to Sell:

Cars.com (CARS)

Market Cap: $688.6 million

Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.

Why Does CARS Worry Us?

Likely needs to improve its platform or increase its marketing budget for penetration to accelerate as its dealer customers were flat over the last two years Estimated sales growth of 1.5% for the next 12 months implies demand will slow from its three-year trend Earnings growth underperformed the sector average over the last three years as its EPS grew by just 1.9% annually

Cars.com is trading at $10.87 per share, or 3.2x forward EV/EBITDA. If you’re considering CARS for your portfolio, see our FREE research report to learn more.

Two Stocks to Watch:

Griffon (GFF)

Market Cap: $3.45 billion

Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.

Why Does GFF Stand Out?

Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage Incremental sales significantly boosted profitability as its annual earnings per share growth of 32.6% over the last five years outstripped its revenue performance Free cash flow margin grew by 10 percentage points over the last five years, giving the company more chips to play with

At $73.01 per share, Griffon trades at 12.2x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

ESCO (ESE)

Market Cap: $4.74 billion

A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.

Why Does ESE Catch Our Eye?

Exciting sales outlook for the upcoming 12 months calls for 18.2% growth, an acceleration from its two-year trend Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient Earnings per share grew by 20.7% annually over the last two years and trumped its peers

Story Continues

ESCO’s stock price of $183.34 implies a valuation ratio of 29.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.

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