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 is one Russell 2000 stock that could deliver strong gains and two that may face some trouble.
Two Stocks to Sell:
Health Catalyst (HCAT)
Market Cap: $86.1 million
Built on its "Health Catalyst Flywheel" methodology that emphasizes measurable outcomes, Health Catalyst (NASDAQ: HCAT) provides data and analytics technology and services that help healthcare organizations manage their data and drive measurable clinical, financial, and operational improvements.
Why Should You Dump HCAT?
- Muted 2.5% annual revenue growth over the last two years shows its demand lagged behind its software peers
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
- Cash-burning history makes us doubt the long-term viability of its business model
Health Catalyst is trading at $1.20 per share, or 0.3x forward price-to-sales. To fully understand why you should be careful with HCAT, check out our full research report (it’s free).
First Busey (BUSE)
Market Cap: $2.14 billion
Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey (NASDAQ: BUSE) is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.
Why Do We Think Twice About BUSE?
- Inferior net interest margin of 3.3% means it must compensate for lower profitability through increased loan originations
- Annual earnings per share growth of 4.9% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Projected tangible book value per share decline of 3.2% for the next 12 months points to tough credit quality challenges ahead
At $24.79 per share, First Busey trades at 0.9x forward P/B. Dive into our free research report to see why there are better opportunities than BUSE.
One Stock to Buy:
IMAX (IMAX)
Market Cap: $2.11 billion
Originally developed for World Expo '67 in Montreal as an innovative projection system, IMAX (NYSE: IMAX) provides proprietary large-format cinema technology and systems that deliver immersive movie experiences with enhanced image quality and sound.
Why Is IMAX a Good Business?
- Impressive 24.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Free cash flow margin jumped by 24.3 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Historical investments are beginning to pay off as its returns on capital are growing
IMAX’s stock price of $39.40 implies a valuation ratio of 23x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.
