3 Russell 2000 Stocks with Open Questions

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.

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 are three Russell 2000 stocks to steer clear of and some alternatives to watch instead.

Douglas Dynamics (PLOW)

Market Cap: $967.7 million

Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE:PLOW) offers snow and ice equipment for the roads and sidewalks.

Why Are We Wary of PLOW?

1. Muted 1.8% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. 2.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Eroding returns on capital suggest its historical profit centers are aging

Douglas Dynamics is trading at $42.01 per share, or 17.9x forward P/E. Dive into our free research report to see why there are better opportunities than PLOW.

SoundHound AI (SOUN)

Market Cap: $3.29 billion

Born from the idea that machines should understand human speech as naturally as people do, SoundHound AI (NASDAQ:SOUN) develops voice recognition and conversational intelligence technology that enables businesses to integrate voice assistants into their products and services.

Why Does SOUN Fall Short?

1. Gross margin of 39.7% reflects its high servicing costs
2. Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
3. Cash burn makes us question whether it can achieve sustainable long-term growth

SoundHound AI’s stock price of $7.87 implies a valuation ratio of 14.7x forward price-to-sales. To fully understand why you should be careful with SOUN, check out our full research report (it’s free).

OFG Bancorp (OFG)

Market Cap: $1.82 billion

Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE:OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands.

Why Does OFG Give Us Pause?

1. 8.3% annual net interest income growth over the last five years was slower than its banking peers
2. Net interest income is projected to tank by 2.2% over the next 12 months as demand evaporates
3. Net interest margin dropped by 77.7 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market

At $42.14 per share, OFG Bancorp trades at 1.2x forward P/B. Check out our free in-depth research report to learn more about why OFG doesn’t pass our bar.

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. 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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.