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 three Russell 2000 stocks that don’t make the cut and some better choices instead.
Angi (ANGI)
Market Cap: $191.4 million
Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.
Why Are We Wary of ANGI?
- Struggled with new customer acquisition as its service requests averaged 17.1% declines
- Sales are projected to tank by 5.5% over the next 12 months as its demand continues evaporating
- Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
At $4.74 per share, Angi trades at 3.8x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than ANGI.
Shake Shack (SHAK)
Market Cap: $2.55 billion
Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.
Why Does SHAK Give Us Pause?
- Poor expense management has led to an operating margin of 2.5% that is below the industry average
- Poor free cash flow margin of 1.2% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- ROIC of 0.1% reflects management’s challenges in identifying attractive investment opportunities
Shake Shack is trading at $63.15 per share, or 54x forward P/E. Check out our free in-depth research report to learn more about why SHAK doesn’t pass our bar.
Seacoast Banking (SBCF)
Market Cap: $3.24 billion
Founded during the Florida land boom of 1926 and surviving the Great Depression, Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is a financial holding company that provides commercial and retail banking, wealth management, and mortgage services throughout Florida.
Why Are We Cautious About SBCF?
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 1.6% annually over the last five years
- Below-average return on equity indicates management struggled to find compelling investment opportunities
Seacoast Banking’s stock price of $33.86 implies a valuation ratio of 1.2x forward P/B. If you’re considering SBCF for your portfolio, see our FREE research report to learn more.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.