The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential. However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
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 three Russell 2000 stocks that don’t make the cut and some better choices instead.
PubMatic (PUBM)
Market Cap: $345.8 million
Powering billions of daily ad impressions across the open internet, PubMatic (NASDAQ: PUBM) operates a technology platform that helps publishers maximize revenue from their digital advertising inventory while giving advertisers more control and transparency.
Why Do We Avoid PUBM?
- Customers generally do not adopt complementary products as its 107% net revenue retention rate lags behind the industry standard
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
- Free cash flow margin is forecasted to shrink by 8.4 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
PubMatic’s stock price of $7.45 implies a valuation ratio of 1.3x forward price-to-sales. Read our free research report to see why you should think twice about including PUBM in your portfolio.
Progyny (PGNY)
Market Cap: $2.08 billion
Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ: PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.
Why Is PGNY Not Exciting?
- Subscale operations are evident in its revenue base of $1.27 billion, meaning it has fewer distribution channels than its larger rivals
- ROIC of 4% reflects management’s challenges in identifying attractive investment opportunities
At $24.11 per share, Progyny trades at 13x forward P/E. Dive into our free research report to see why there are better opportunities than PGNY.
Peoples Bancorp (PEBO)
Market Cap: $1.12 billion
Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ: PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.
Why Does PEBO Give Us Pause?
- 3.5% annual revenue growth over the last two years was slower than its banking peers
- Net interest margin dropped by 45.3 basis points (100 basis points = 1 percentage point) over the last two years, implying the firm’s loan book profitability fell as competitors entered the market
- Earnings per share fell by 12.4% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
Peoples Bancorp is trading at $31.95 per share, or 0.9x forward P/B. If you’re considering PEBO for your portfolio, see our FREE research report to learn more.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.
