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.
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 two Russell 2000 stocks that could be the next big thing and one that may struggle to keep up.
One Stock to Sell:
10x Genomics (TXG)
Market Cap: $2.06 billion
Founded in 2012 by scientists seeking to overcome limitations in traditional biological research methods, 10x Genomics (NASDAQ: TXG) develops instruments, consumables, and software that enable researchers to analyze biological systems at single-cell resolution and spatial context.
Why Is TXG Not Exciting?
- 4.2% annual revenue growth over the last two years was slower than its healthcare peers
- Negative free cash flow raises questions about the return timeline for its investments
- Push for growth has led to negative returns on capital, signaling value destruction
At $16.01 per share, 10x Genomics trades at 3.4x forward price-to-sales. Read our free research report to see why you should think twice about including TXG in your portfolio.
Two Stocks to Watch:
Hims & Hers Health (HIMS)
Market Cap: $7.39 billion
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Should HIMS Be on Your Watchlist?
- Customer trends over the past two years show it’s maintaining a steady flow of new contracts that can potentially increase in value over time
- Free cash flow margin increased by 21.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Hims & Hers Health’s stock price of $32.32 implies a valuation ratio of 31.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Maximus (MMS)
Market Cap: $4.70 billion
With nearly 50 years of experience translating public policy into operational programs that serve millions of citizens, Maximus (NYSE: MMS) provides operational services, clinical assessments, and technology solutions to government agencies in the U.S. and internationally.
Why Do We Like MMS?
- Annual revenue growth of 9.4% over the last five years was superb and indicates its market share increased during this cycle
- Economies of scale give it some operating leverage when demand rises
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 34.8% exceeded its revenue gains over the last two years
Maximus is trading at $86.32 per share, or 10.6x 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 5 Strong Momentum 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.
