1 Russell 2000 Stock Worth Your Attention and 2 We Find Risky

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. That said, here is one Russell 2000 stock that could be the next big thing and two best left off your watchlist.

Two Stocks to Sell:

Xponential Fitness (XPOF)

Market Cap: $318.3 million

Owner of CycleBar, Rumble, and Club Pilates, Xponential Fitness (NYSE:XPOF) is a boutique fitness brand offering diverse and specialized exercise experiences.

Why Do We Think XPOF Will Underperform?

1. Lackluster 5.8% annual revenue growth over the last two years indicates the company is losing ground to competitors
2. Persistent operating margin losses suggest the business manages its expenses poorly
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Xponential Fitness is trading at $8.89 per share, or 6x forward P/E. To fully understand why you should be careful with XPOF, check out our full research report (it’s free).

Tutor Perini (TPC)

Market Cap: $2.95 billion

Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE:TPC) is a civil and building construction company offering diversified general contracting and design-build services.

Why Should You Sell TPC?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. Performance over the past five years was negatively impacted by new share issuances as its earnings per share fell by 32.4% annually while its revenue was flat
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Tutor Perini’s stock price of $55.99 implies a valuation ratio of 21.9x forward P/E. Check out our free in-depth research report to learn more about why TPC doesn’t pass our bar.

One Stock to Buy:

HCI Group (HCI)

Market Cap: $2.11 billion

Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE:HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.

Why Is HCI a Top Pick?

1. Net premiums earned surged by 26.7% annually over the past two years, reflecting strong market share gains this cycle
2. Balance sheet strength has increased this cycle as its 63.4% annual book value per share growth over the last two years was exceptional
3. Capital strength will likely rise over the next 12 months as its expected book value per share growth of 21% is robust

At $162.52 per share, HCI Group trades at 2.6x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

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Take advantage of the rebound by checking out 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 183% over the last five years (as of March 31st 2025).

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