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 be the next breakout winners and one that may struggle to keep up.
One Stock to Sell:
Manitowoc (MTW)
Market Cap: $383.3 million
Contracted by the United States Navy during WWII, Manitowoc (NYSE:MTW) provides cranes and lifting equipment.
Why Do We Pass on MTW?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 15.3% declines over the past two years
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 17.6% annually
- Free cash flow margin dropped by 6.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Manitowoc’s stock price of $10.92 implies a valuation ratio of 0.2x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including MTW in your portfolio.
Two Stocks to Watch:
SPX Technologies (SPXC)
Market Cap: $9.31 billion
With roots dating back to 1912 as the Piston Ring Company, SPX Technologies (NYSE:SPXC) supplies specialized infrastructure equipment for HVAC systems and detection and measurement applications across industrial, commercial, and utility markets.
Why Will SPXC Outperform?
- Annual revenue growth of 12.5% over the last two years was superb and indicates its market share increased during this cycle
- Operating margin expanded by 8.1 percentage points over the last five years as it scaled and became more efficient
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 22.2% annually
SPX Technologies is trading at $188.55 per share, or 27.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
IonQ (IONQ)
Market Cap: $22.12 billion
Founded by quantum physics pioneers from the University of Maryland and Duke University in 2015, IonQ (NYSE:IONQ) develops quantum computers that process information using trapped ions to solve complex computational problems beyond the capabilities of traditional computers.
Why Does IONQ Stand Out?
- Impressive 78.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Exciting sales outlook for the upcoming 12 months calls for 156% growth, an acceleration from its two-year trend
- Adjusted operating margin improvement of 5,803.2 percentage points over the last five years demonstrates its ability to scale efficiently
At $74.85 per share, IonQ trades at 139x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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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