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.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. Keeping that in mind, here are three Russell 2000 stocks that don’t make the cut and some better choices instead.
Asure Software (ASUR)
Market Cap: $221.3 million
Operating in the often-overlooked smaller metropolitan markets where HR expertise can be scarce, Asure Software (NASDAQ: ASUR) provides cloud-based human capital management software and services that help small and medium-sized businesses manage payroll, taxes, time tracking, and HR compliance.
Why Should You Sell ASUR?
- Muted 4% annual revenue growth over the last two years shows its demand lagged behind its software peers
- Static operating margin over the last year shows it couldn’t become more efficient
- Low free cash flow margin of 5.5% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
At $7.99 per share, Asure Software trades at 1.4x forward price-to-sales. To fully understand why you should be careful with ASUR, check out our full research report (it’s free for active Edge members).
Enviri (NVRI)
Market Cap: $1.08 billion
Cooling America’s first indoor ice rink in the 19th century, Enviri (NYSE: NVRI) offers steel and waste handling services.
Why Should You Dump NVRI?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Negative free cash flow raises questions about the return timeline for its investments
- 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Enviri is trading at $13.35 per share, or 3.7x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than NVRI.
Bank of Hawaii (BOH)
Market Cap: $2.54 billion
Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE: BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.
Why Is BOH Not Exciting?
- Flat net interest income over the last five years suggest it must find different ways to grow during this cycle
- Weak unit economics are reflected in its net interest margin of 2.3%, one of the worst among bank companies
- 1.4% annual tangible book value per share growth over the last five years was slower than its banking peers
Bank of Hawaii’s stock price of $63.77 implies a valuation ratio of 1.7x forward P/B. Read our free research report to see why you should think twice about including BOH in your portfolio.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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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