3 Russell 2000 Stocks We Keep Off Our Radar

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.

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 are three Russell 2000 stocks that don’t make the cut and some better choices instead.

American Eagle (AEO)

Market Cap: $3.81 billion

With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.

Why Do We Think Twice About AEO?

1. Limited expansion of stores suggests it’s prioritizing efficiency over growth at this stage
2. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 3.9 percentage points
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging

At $21.74 per share, American Eagle trades at 13x forward P/E. If you’re considering AEO for your portfolio, see our FREE research report to learn more.

Enviri (NVRI)

Market Cap: $1.48 billion

Cooling America’s first indoor ice rink in the 19th century, Enviri (NYSE:NVRI) offers steel and waste handling services.

Why Are We Out on NVRI?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.7% annually over the last two years
2. Negative free cash flow raises questions about the return timeline for its investments
3. 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Enviri is trading at $18.17 per share, or 14.1x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than NVRI.

F&G Annuities & Life (FG)

Market Cap: $3.15 billion

Founded in 1959 and serving approximately 677,000 policyholders who rely on its financial protection products, F&G Annuities & Life (NYSE:FG) provides fixed annuities, life insurance, and pension risk transfer solutions to retail and institutional clients.

Why Does FG Give Us Pause?

1. Costs have risen faster than its revenue over the last four years, causing its pre-tax profit margin to decline by 21.6 percentage points
2. Book value per share tumbled by 4.6% annually over the last four years, showing insurance sector trends are working against its favor during this cycle
3. Low return on equity reflects management’s struggle to allocate funds effectively

F&G Annuities & Life’s stock price of $23.24 implies a valuation ratio of 0.6x forward P/B. Check out our free in-depth research report to learn more about why FG doesn’t pass our bar.

Stocks We Like More

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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.