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 two Russell 2000 stocks that could deliver strong gains and one that may face some trouble.
One Stock to Sell:
Ridgepost Capital (RPC)
Market Cap: $968.9 million
Operating as a bridge between institutional investors and hard-to-access private market opportunities, Ridgepost Capital (NYSE: RPC) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.
Why Are We Cautious About RPC?
- Annual earnings per share growth of 5.7% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Below-average return on equity indicates management struggled to find compelling investment opportunities
Ridgepost Capital’s stock price of $8.88 implies a valuation ratio of 7.9x forward P/E. To fully understand why you should be careful with RPC, check out our full research report (it’s free).
Two Stocks to Watch:
Nicolet Bankshares (NIC)
Market Cap: $3.64 billion
Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE: NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.
Why Is NIC a Good Business?
- Market share has increased this cycle as its 21.2% annual net interest income growth over the last five years was exceptional
- Net interest margin jumped by 64.3 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more resources to pursue growth initiatives
- Additional sales over the last two years increased its profitability as the 25.7% annual growth in its earnings per share outpaced its revenue
Nicolet Bankshares is trading at $173.91 per share, or 1.5x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.
Magnolia Oil & Gas (MGY)
Market Cap: $5.86 billion
Operating over 600,000 net acres primarily in two distinct South Texas regions, Magnolia Oil & Gas (NYSE: MGY) drills and produces oil, natural gas, and natural gas liquids from South Texas formations.
Why Are We Fans of MGY?
- Annual revenue growth of 18.7% over the last five years was superb and indicates its market share increased during this cycle
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 84.6%
- Strong free cash flow margin of 39.1% enables it to reinvest or return capital consistently
At $25.20 per share, Magnolia Oil & Gas trades at 7.3x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
