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 deliver strong gains and one that may face some trouble.
One Stock to Sell:
Cadre (CDRE)
Market Cap: $1.21 billion
Originally known as Safariland, Cadre (NYSE:CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Why Does CDRE Worry Us?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 1.7 percentage points
- Earnings per share were flat over the last four years and fell short of the peer group average
- Free cash flow margin shrank by 7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Cadre’s stock price of $29.72 implies a valuation ratio of 20x forward P/E. To fully understand why you should be careful with CDRE, check out our full research report (it’s free).
Two Stocks to Watch:
Lantheus (LNTH)
Market Cap: $3.66 billion
Pioneering the "Find, Fight and Follow" approach to disease management, Lantheus Holdings (NASDAQGM:LNTH) develops and commercializes radiopharmaceuticals and other imaging agents that help healthcare professionals detect, diagnose, and treat diseases.
Why Are We Fans of LNTH?
- Impressive 35.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Free cash flow margin grew by 22.9 percentage points over the last five years, giving the company more chips to play with
- Returns on capital are growing as management capitalizes on its market opportunities
At $54 per share, Lantheus trades at 8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Hamilton Insurance Group (HG)
Market Cap: $2.33 billion
Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group (NYSE:HG) operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.
Why Could HG Be a Winner?
- Annual revenue growth of 49.7% over the last two years was superb and indicates its market share increased during this cycle
- Net premiums earned expanded by 26% annually over the last two years, demonstrating exceptional market penetration this cycle
- Combined ratio expanded by 32.5 percentage points over the last two years as it scaled and became more efficient
Hamilton Insurance Group is trading at $23.31 per share, or 0.9x forward P/B. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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 Kadant (+351% 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
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