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. Keeping that in mind, here are three Russell 2000 stocks to avoid and better alternatives to consider.
America's Car-Mart (CRMT)
Market Cap: $214 million
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
Why Should You Sell CRMT?
- Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new locations
- Issuance of new shares over the last three years caused its earnings per share to fall by 74.7% annually while its revenue grew
- High net-debt-to-EBITDA ratio of 19× could force the company to raise capital at unfavorable terms if market conditions deteriorate
America's Car-Mart’s stock price of $25.78 implies a valuation ratio of 50.1x forward P/E. If you’re considering CRMT for your portfolio, see our FREE research report to learn more.
Cohen & Steers (CNS)
Market Cap: $3.23 billion
Founded in 1986 as a pioneer in real estate investment trusts (REITs), Cohen & Steers (NYSE:CNS) is an investment manager specializing in real estate securities, infrastructure, real assets, and preferred securities for institutional and individual investors.
Why Are We Cautious About CNS?
- Sales trends were unexciting over the last two years as its 5.5% annual growth was below the typical financials company
- Incremental sales over the last two years were less profitable as its 2% annual earnings per share growth lagged its revenue gains
Cohen & Steers is trading at $63.26 per share, or 18.8x forward P/E. Read our free research report to see why you should think twice about including CNS in your portfolio.
Dime Community Bancshares (DCOM)
Market Cap: $1.37 billion
With roots dating back to 1910 and a name that evokes the historic "dime savings banks" of America's past, Dime Community Bancshares (NASDAQ:DCOM) is a New York-based bank holding company that provides commercial banking and financial services to businesses and consumers throughout Greater Long Island.
Why Are We Wary of DCOM?
- Sales trends were unexciting over the last two years as its 6.5% annual growth was below the typical banking company
- Inferior net interest margin of 2.7% means it must compensate for lower profitability through increased loan originations
- Annual earnings per share growth of 1.6% underperformed its revenue over the last five years, showing its incremental sales were less profitable
At $31.25 per share, Dime Community Bancshares trades at 1x forward P/B. Dive into our free research report to see why there are better opportunities than DCOM.
Stocks We Like More
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The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.