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. Keeping that in mind, here are two Russell 2000 stocks that could be the next breakout winners and one best left off your watchlist.
One Stock to Sell:
Bandwidth (BAND)
Market Cap: $469.1 million
Started in 1999 by David Morken who was later joined by Henry Kaestner as co-founder in 2001, Bandwidth (NASDAQ:BAND) provides thousands of customers with a software platform that uses its own global network to provide phone numbers, voice, and text connectivity.
Why Should You Dump BAND?
- Sales trends were unexciting over the last three years as its 13.9% annual growth was below the typical software company
- Estimated sales growth of 2.8% for the next 12 months implies demand will slow from its three-year trend
- Sky-high servicing costs result in an inferior gross margin of 38% that must be offset through increased usage
Bandwidth is trading at $15.76 per share, or 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why BAND doesn’t pass our bar.
Two Stocks to Watch:
The Ensign Group (ENSG)
Market Cap: $8.42 billion
Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ:ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.
Why Does ENSG Stand Out?
- Unit sales averaged 13.2% growth over the past two years and imply healthy demand for its products
- Forecasted revenue growth of 14.3% for the next 12 months indicates its momentum over the last two years is sustainable
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 18.4% annually
At $145.13 per share, The Ensign Group trades at 22.9x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Clover Health (CLOV)
Market Cap: $1.47 billion
Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ:CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.
Why Do We Like CLOV?
- Annual revenue growth of 23.8% over the past five years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 19% annually over the last four years, massively outpacing its peers
- Free cash flow profile has reached break even, showing the company has crossed a key inflection point
Clover Health’s stock price of $2.96 implies a valuation ratio of 39.4x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 5 Growth Stocks for this month. 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 Tecnoglass (+1,754% 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