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.
Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. Keeping that in mind, here are two Russell 2000 stocks that could be the next big thing and one best left off your watchlist.
One Industrials Stock to Sell:
Global Industrial (GIC)
Market Cap: $1.16 billion
Formerly known as Systemax, Global Industrial (NYSE:GIC) distributes industrial and commercial products to businesses and institutions.
Why Are We Out on GIC?
- Muted 4.9% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 1.4% annually
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Global Industrial’s stock price of $29.99 implies a valuation ratio of 15.2x forward P/E. Dive into our free research report to see why there are better opportunities than GIC.
Two Industrials Stocks to Watch:
AAR (AIR)
Market Cap: $3.34 billion
The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE:AIR) is a provider of aircraft maintenance services
Why Are We Fans of AIR?
- Market share has increased this cycle as its 16.8% annual revenue growth over the last two years was exceptional
- Estimated revenue growth of 12% for the next 12 months implies its momentum over the last two years will continue
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 18.9% annually
At $84.38 per share, AAR trades at 18.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Watts Water Technologies (WTS)
Market Cap: $9.27 billion
Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Do We Love WTS?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.3% annual sales growth over the last five years
- Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 45.9%
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 21.8% exceeded its revenue gains over the last five years
Watts Water Technologies is trading at $278.21 per share, or 25x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
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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