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.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. Keeping that in mind, here are two Russell 2000 stocks that could be the next big thing and one that may struggle to keep up.
One Stock to Sell:
Designer Brands (DBI)
Market Cap: $378.7 million
Founded in 1969 as a shoe importer and distributor, Designer Brands (NYSE:DBI) is an American discount retailer focused on footwear and accessories.
Why Do We Pass on DBI?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- High net-debt-to-EBITDA ratio of 11× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Designer Brands’s stock price of $7.65 implies a valuation ratio of 26.9x forward P/E. Dive into our free research report to see why there are better opportunities than DBI.
Two Stocks to Watch:
Zeta Global (ZETA)
Market Cap: $4.43 billion
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE:ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Will ZETA Outperform?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 36.4% over the last year
- Market share will likely rise over the next 12 months as its expected revenue growth of 31.6% is robust
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
Zeta Global is trading at $18.10 per share, or 2.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
AZZ (AZZ)
Market Cap: $3.24 billion
Responsible for projects like nuclear facilities, AZZ (NYSE:AZZ) is a provider of metal coating and power infrastructure solutions.
Why Are We Fans of AZZ?
- Highly efficient business model is illustrated by its impressive 15% operating margin, and its operating leverage amplified its profits over the last five years
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 26% outpaced its revenue gains
- Free cash flow margin increased by 23 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $107.80 per share, AZZ trades at 17.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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 Comfort Systems (+782% 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.