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.
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. That said, here are three Russell 2000 stocks to steer clear of and some alternatives to watch instead.
Plexus (PLXS)
Market Cap: $5.48 billion
With over 20,000 team members across 26 global facilities, Plexus (NASDAQ: PLXS) designs, manufactures, and services complex electronic products for companies in aerospace/defense, healthcare, and industrial sectors.
Why Does PLXS Fall Short?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Eroding returns on capital suggest its historical profit centers are aging
Plexus’s stock price of $204.51 implies a valuation ratio of 26.1x forward P/E. To fully understand why you should be careful with PLXS, check out our full research report (it’s free).
WesBanco (WSBC)
Market Cap: $3.54 billion
Tracing its roots back to 1870 in West Virginia, WesBanco (NASDAQ: WSBC) is a bank holding company that provides retail and commercial banking, trust services, insurance, and investment products through its subsidiaries across several Midwestern and Mid-Atlantic states.
Why Does WSBC Give Us Pause?
- Sales trends were unexciting over the last five years as its 10% annual growth was below the typical banking company
- Tangible book value per share was flat over the last five years, indicating it’s failed to build equity value this cycle
- Below-average return on equity indicates management struggled to find compelling investment opportunities
At $37.02 per share, WesBanco trades at 0.9x forward P/B. Read our free research report to see why you should think twice about including WSBC in your portfolio.
TriCo Bancshares (TCBK)
Market Cap: $1.65 billion
Founded in 1975 and headquartered in Chico, California, TriCo Bancshares (NASDAQ: TCBK) operates Tri Counties Bank, providing personal, small business, and commercial banking services through branches across California.
Why Do We Think Twice About TCBK?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Muted 6.4% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 2.4% annually
TriCo Bancshares is trading at $50.63 per share, or 1.2x forward P/B. Check out our free in-depth research report to learn more about why TCBK doesn’t pass our bar.
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 9 Market-Beating Stocks. 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.
