1 Russell 2000 Stock Worth Your Attention and 2 Facing Headwinds

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.

Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. That said, here is one Russell 2000 stock that could be the next big thing and two that may struggle to keep up.

Two Stocks to Sell:

Insteel (IIIN)

Market Cap: $753.3 million

Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE:IIIN) provides steel wire reinforcing products for concrete.

Why Does IIIN Give Us Pause?

1. Sales tumbled by 7% annually over the last two years, showing market trends are working against its favor during this cycle
2. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 19.5% annually, worse than its revenue
3. Waning returns on capital imply its previous profit engines are losing steam

Insteel is trading at $38.81 per share, or 15x forward P/E. Read our free research report to see why you should think twice about including IIIN in your portfolio.

Winnebago (WGO)

Market Cap: $975.5 million

Created to provide high-quality, affordable RVs to the post-war American family, Winnebago (NYSE:WGO) is a manufacturer of recreational vehicles, providing a range of motorhomes, travel trailers, and fifth-wheel products for outdoor and adventure lifestyles.

Why Do We Avoid WGO?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 16.1% annually over the last two years
2. Eroding returns on capital suggest its historical profit centers are aging
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Winnebago’s stock price of $34.80 implies a valuation ratio of 12.4x forward P/E. Dive into our free research report to see why there are better opportunities than WGO.

One Stock to Buy:

Customers Bancorp (CUBI)

Market Cap: $2.18 billion

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE:CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Why Will CUBI Outperform?

1. Market share has increased this cycle as its 14.7% annual net interest income growth over the last five years was exceptional
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 23.6% over the last five years outstripped its revenue performance
3. Annual tangible book value per share growth of 18% over the last five years was superb and indicates its capital strength increased during this cycle

At $64.47 per share, Customers Bancorp trades at 1.1x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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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).

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