1 Russell 2000 Stock with Exciting Potential and 2 Facing Challenges

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.

Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. That said, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.

Two Stocks to Sell:

STAAR Surgical (STAA)

Market Cap: $1.38 billion

With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ:STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.

Why Do We Think STAA Will Underperform?

1. Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
2. Free cash flow margin shrank by 35.2 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Diminishing returns on capital suggest its earlier profit pools are drying up

STAAR Surgical is trading at $27.85 per share, or 118.2x forward P/E. If you’re considering STAA for your portfolio, see our FREE research report to learn more.

Provident Financial Services (PFS)

Market Cap: $2.58 billion

Founded in 1839 and serving communities across New Jersey, Pennsylvania, and New York, Provident Financial Services (NYSE:PFS) operates a regional bank providing commercial, residential, and consumer lending alongside wealth management and insurance services.

Why Does PFS Fall Short?

1. Net interest margin of 3.2% reflects its high servicing and capital costs
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 7.1% annually
3. Tangible book value per share stagnated over the last five years, limiting its ability to leverage its balance sheet to make additional investments

Provident Financial Services’s stock price of $19.76 implies a valuation ratio of 0.9x forward P/B. Read our free research report to see why you should think twice about including PFS in your portfolio.

One Stock to Buy:

Enova (ENVA)

Market Cap: $2.85 billion

Pioneering online lending since 2004 with a massive database of over 65 terabytes of customer behavior data, Enova International (NYSE:ENVA) provides online financial services including installment loans and lines of credit to non-prime consumers and small businesses in the United States and Brazil.

Why Do We Love ENVA?

1. Annual revenue growth of 23.4% over the last two years was superb and indicates its market share increased during this cycle
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 26.8% exceeded its revenue gains over the last two years
3. Annual book value per share growth of 25.4% over the past five years was outstanding, reflecting strong capital accumulation this cycle

At $113.98 per share, Enova trades at 9x 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

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at 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).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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

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