3 Russell 2000 Stocks That Concern Us

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 to avoid and better alternatives to consider.

Boise Cascade (BCC)

Market Cap: $2.66 billion

Formed through the merger of two lumber companies, Boise Cascade Company (NYSE:BCC) manufactures and distributes wood products and other building materials.

Why Do We Steer Clear of BCC?

1. Annual sales declines of 3.2% for the past two years show its products and services struggled to connect with the market during this cycle
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.9 percentage points
3. Waning returns on capital imply its previous profit engines are losing steam

Boise Cascade’s stock price of $74.27 implies a valuation ratio of 20.1x forward P/E. Read our free research report to see why you should think twice about including BCC in your portfolio.

Global Industrial (GIC)

Market Cap: $1.21 billion

Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.

Why Do We Think GIC Will Underperform?

1. Muted 4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Earnings per share were flat over the last two years and fell short of the peer group average
3. Eroding returns on capital suggest its historical profit centers are aging

Global Industrial is trading at $31.72 per share, or 16x forward P/E. Dive into our free research report to see why there are better opportunities than GIC.

Visteon (VC)

Market Cap: $2.46 billion

Originally spun off from Ford Motor Company in 2000, Visteon (NYSE:VC) designs and manufactures cockpit electronics for vehicles, including digital instrument clusters, displays, infotainment systems, and battery management systems.

Why Does VC Worry Us?

1. Sales tumbled by 2.4% annually over the last two years, showing market trends are working against its favor during this cycle
2. High input costs result in an inferior gross margin of 12% that must be offset through higher volumes
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

At $91.85 per share, Visteon trades at 10.4x forward P/E. If you’re considering VC for your portfolio, see our FREE research report to learn more.

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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.