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.
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:
ACV Auctions (ACVA)
Market Cap: $1.08 billion
Founded in 2014, ACV Auctions (NASDAQ: ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.
Why Is ACVA Not Exciting?
- Gross margin of 27.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
- Low free cash flow margin of 4.1% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
ACV Auctions is trading at $6.42 per share, or 14.8x forward EV/EBITDA. Read our free research report to see why you should think twice about including ACVA in your portfolio.
Zevia (ZVIA)
Market Cap: $168.5 million
With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE: ZVIA) is a better-for-you beverage company.
Why Are We Cautious About ZVIA?
- Sales stagnated over the last three years and signal the need for new growth strategies
- Subscale operations are evident in its revenue base of $162.8 million, meaning it has fewer distribution channels than its larger rivals
- Persistent operating margin losses suggest the business manages its expenses poorly
Zevia’s stock price of $2.50 implies a valuation ratio of 93.5x forward EV-to-EBITDA. If you’re considering ZVIA for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
United Parks & Resorts (PRKS)
Market Cap: $1.71 billion
Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE: PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.
Why Do We Like PRKS?
- Annual revenue growth of 23.8% over the past five years was outstanding, reflecting market share gains
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 25.3%
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.4% exceeded its revenue gains over the last five years
At $31.28 per share, United Parks & Resorts trades at 7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 6 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-small-cap company Exlservice (+354% 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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