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.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. That said, here is one Russell 2000 stock that could deliver strong gains and two best left off your watchlist.
Two Stocks to Sell:
BlackLine (BL)
Market Cap: $2.15 billion
Born from the vision to eliminate tedious manual spreadsheet work for accountants, BlackLine (NASDAQ: BL) provides cloud-based software that automates and streamlines financial close, intercompany accounting, and invoice-to-cash processes for accounting departments.
Why Are We Wary of BL?
- Offerings struggled to generate meaningful interest as its average billings growth of 8.5% over the last year did not impress
- Below-average net revenue retention rate of 104% suggests it has some trouble expanding within existing accounts
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
BlackLine is trading at $36.00 per share, or 3.5x forward price-to-sales. Read our free research report to see why you should think twice about including BL in your portfolio.
Korn Ferry (KFY)
Market Cap: $3.25 billion
With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE: KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.
Why Do We Think Twice About KFY?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.3 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
Korn Ferry’s stock price of $62.20 implies a valuation ratio of 11.6x forward P/E. Check out our free in-depth research report to learn more about why KFY doesn’t pass our bar.
One Stock to Watch:
CRA (CRAI)
Market Cap: $1.09 billion
Often retained for high-stakes matters with multibillion-dollar implications, CRA International (NASDAQ: CRAI) provides economic, financial, and management consulting services to corporations, law firms, and government agencies for litigation, regulatory proceedings, and business strategy.
Why Do We Like CRAI?
- Annual revenue growth of 9.7% over the last two years was superb and indicates its market share increased during this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 27.6% to outpace its revenue gains
- Industry-leading 18.7% return on capital demonstrates management’s skill in finding high-return investments
At $166.13 per share, CRA trades at 18.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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 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 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
