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. That said, here are three Russell 2000 stocks to avoid and better alternatives to consider.
Getty Images (GETY)
Market Cap: $744.2 million
With a vast library of over 562 million visual assets documenting everything from breaking news to iconic historical moments, Getty Images (NYSE: GETY) is a global visual content marketplace that licenses photos, videos, illustrations, and music to businesses, media outlets, and creative professionals.
Why Is GETY Risky?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Free cash flow margin shrank by 7.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Getty Images’s stock price of $1.83 implies a valuation ratio of 2.6x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than GETY.
Hancock Whitney (HWC)
Market Cap: $4.59 billion
With roots dating back to 1899 and a strategic focus on the economically vibrant Gulf South region, Hancock Whitney (NASDAQ: HWC) is a regional bank providing commercial, consumer, and real estate loans alongside deposit services, wealth management, and treasury solutions.
Why Are We Cautious About HWC?
- Annual net interest income growth of 3.5% over the last four years was below our standards for the bank sector
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5.3%
- Net interest margin of 3.3% is well below other banks, signaling its loans aren’t very profitable
At $53.61 per share, Hancock Whitney trades at 1x forward P/B. To fully understand why you should be careful with HWC, check out our full research report (it’s free).
Atlantic Union Bankshares (AUB)
Market Cap: $4.28 billion
Tracing its roots back to 1902 when it first opened its doors in Virginia, Atlantic Union Bankshares (NYSE: AUB) is a full-service regional bank providing commercial and retail banking, wealth management, and insurance services throughout Virginia and parts of Maryland and North Carolina.
Why Is AUB Not Exciting?
- Net interest income trends were unexciting over the last four years as its 7.3% annual growth was below the typical bank company
- Muted 3.2% annual tangible book value per share growth over the last two years shows its capital generation lagged behind its bank peers
- Tangible book value per share is projected to decrease by 7.5% over the next 12 months as capital generation weakens
Atlantic Union Bankshares is trading at $30.03 per share, or 0.9x forward P/B. Read our free research report to see why you should think twice about including AUB in your portfolio.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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
