The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on. However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.
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.
Impinj (PI)
Market Cap: $5.20 billion
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ:PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Are We Wary of PI?
- Products and services resonate with customers, evidenced by its respectable 8.6% annualized sales growth over the last two years
- Historical operating margin losses point to an inefficient cost structure
- Negative returns on capital show management lost money while trying to expand the business
Impinj’s stock price of $166.50 implies a valuation ratio of 68.1x forward P/E. Dive into our free research report to see why there are better opportunities than PI.
Columbus McKinnon (CMCO)
Market Cap: $513.7 million
With 19 different brands across the globe, Columbus McKinnon (NASDAQ:CMCO) offers material handling equipment for the construction, manufacturing, and transportation industries.
Why Is CMCO Not Exciting?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 14.7% annually
- 11.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Columbus McKinnon is trading at $17.98 per share, or 9.2x forward P/E. Read our free research report to see why you should think twice about including CMCO in your portfolio.
Worthington (WOR)
Market Cap: $2.80 billion
Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Why Is WOR Risky?
- Annual sales declines of 15.3% for the past five years show its products and services struggled to connect with the market during this cycle
- Earnings per share have dipped by 9.1% annually over the past five years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $57.35 per share, Worthington trades at 15.5x forward P/E. If you’re considering WOR for your portfolio, see our FREE research report to learn more.
High-Quality Stocks for All Market Conditions
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.