1 Russell 2000 Stock on Our Buy List 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.

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 is one Russell 2000 stock that could be the next big thing and two that may face some trouble.

Two Stocks to Sell:

Sunrun (RUN)

Market Cap: $4.19 billion

Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ:RUN) provides residential solar electricity, specializing in panel installation and leasing services.

Why Does RUN Give Us Pause?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Cash burn makes us question whether it can achieve sustainable long-term growth
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Sunrun’s stock price of $18.02 implies a valuation ratio of 28.8x forward P/E. Dive into our free research report to see why there are better opportunities than RUN.

RadNet (RDNT)

Market Cap: $5.88 billion

With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ:RDNT) operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.

Why Are We Wary of RDNT?

1. Subscale operations are evident in its revenue base of $1.97 billion, meaning it has fewer distribution channels than its larger rivals
2. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 3.5 percentage points
3. Poor free cash flow margin of 2.3% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

RadNet is trading at $76.72 per share, or 120.6x forward P/E. To fully understand why you should be careful with RDNT, check out our full research report (it’s free for active Edge members).

One Stock to Buy:

Powell (POWL)

Market Cap: $4.15 billion

Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.

Why Are We Backing POWL?

1. Impressive 25.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 86.5% annually, topping its revenue gains
3. Free cash flow margin jumped by 21.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends

At $344.13 per share, Powell trades at 22.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

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 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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