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. That said, here is one Russell 2000 stock that could deliver strong gains and two best left off your watchlist.
Two Stocks to Sell:
Asana (ASAN)
Market Cap: $2.13 billion
Born from the founders' frustration with the inefficiencies of email-based collaboration at Facebook, Asana (NYSE: ASAN) provides a work management platform that helps organizations track projects, set goals, and manage workflows in a centralized digital workspace.
Why Should You Sell ASAN?
- ARR growth averaged a weak 9.6% over the last year, suggesting that competition is pulling some attention away from its software
- Competitive market dynamics make it difficult to retain customers, leading to a weak 96% net revenue retention rate
- Drawn-out sales process reflects its software’s integration hurdles with enterprise clients, restraining customer growth potential
Asana’s stock price of $9.18 implies a valuation ratio of 2.5x forward price-to-sales. Check out our free in-depth research report to learn more about why ASAN doesn’t pass our bar.
Matson (MATX)
Market Cap: $6.24 billion
Founded by a Swedish orphan, Matson (NYSE: MATX) is a provider of ocean transportation and logistics services.
Why Are We Cautious About MATX?
- Sales trends were unexciting over the last five years as its 3.4% annual growth was below the typical industrials company
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 21.4 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
At $208.73 per share, Matson trades at 12.4x forward P/E. Dive into our free research report to see why there are better opportunities than MATX.
One Stock to Buy:
Limbach (LMB)
Market Cap: $552.5 million
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Why Should You Buy LMB?
- Impressive 15.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Additional sales over the last two years increased its profitability as the 20% annual growth in its earnings per share outpaced its revenue
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its rising returns show it’s making even more lucrative bets
Limbach is trading at $46.65 per share, or 13.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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.
