1 Russell 2000 Stock Featured on Our Buy List and 2 We Are Ignoring

Exploring Opportunities and Risks in the Russell 2000

The Russell 2000 index is a hub for small-cap companies, providing investors with the chance to discover promising businesses before they gain widespread attention. However, these smaller firms tend to experience greater price swings and are more susceptible to economic challenges due to their limited scale.

Identifying standout small-cap stocks can be challenging, which is why StockStory aims to spotlight the most compelling options. With that in mind, let’s examine one Russell 2000 stock with breakout potential and two others that may be facing headwinds.

Two Stocks to Consider Selling

SunOpta (STKL)

Market Capitalization: $764.6 million

SunOpta (NASDAQ:STKL) is dedicated to producing clean-label, sustainable food and beverage products, focusing on organic sourcing, processing, and packaging.

Reasons to Be Cautious About STKL:

• Sales have declined by an average of 1.6% annually over the past three years, indicating a lack of strong customer loyalty.
• With annual revenue at $792.4 million, SunOpta has yet to reach the scale enjoyed by larger competitors in the industry.
• The company’s gross margin stands at 15.5%, which is lower than peers, limiting its ability to reinvest in marketing and production upgrades.

Currently, SunOpta is valued at $6.47 per share, translating to a forward P/E ratio of 36.4.

Champion Homes (SKY)

Market Capitalization: $4.41 billion

Champion Homes (NYSE:SKY), established in 1951, is a North American leader in the production of modular homes and buildings.

Challenges Facing SKY:

• Unit sales have been underwhelming for the past two years, suggesting the company may need to reduce prices to stimulate demand.
• Projected sales growth of 2.9% over the next year signals a slowdown compared to its recent performance.
• Declining returns on capital indicate that the company’s most profitable segments may be losing momentum.

Champion Homes trades at $79.89 per share, with a forward P/E of 22.9.

One Stock Worth Buying

Sterling (STRL)

Market Capitalization: $12.61 billion

Sterling Infrastructure (NASDAQ:STRL) is a key player in civil construction, notably contributing to major projects like Houston’s Grand Parkway.

Why STRL Stands Out:

• The company has achieved impressive annual revenue growth of 12.4% over the last two years, reflecting increased market share.
• Sterling generates strong free cash flow, giving it the flexibility to invest in expansion or return value to shareholders. Its improving cash conversion enhances financial stability.
• Rising returns on capital suggest management is successfully identifying and executing on attractive investment opportunities.

Sterling’s shares are priced at $405.50, with a forward P/E ratio of 29.2. Is now the right time to invest?

Discover Even More Compelling Stocks

WHILE YOU’RE HERE: Explore the Top 9 Market-Beating Stocks. The most successful stocks consistently outperform the market, boasting strong revenue growth, increasing free cash flow, and superior returns on capital. These companies have already been recognized by the market for their achievements.

But according to our AI-driven analysis, there’s still room for more growth. See which nine stocks made our list this week — absolutely free.

Previous selections from 2020 include well-known names like Nvidia (up 1,326% from June 2020 to June 2025) and lesser-known companies such as Exlservice, which delivered a 354% return over five years.