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 is one Russell 2000 stock that could be the next big thing and two best left off your watchlist.
Two Stocks to Sell:
Sprinklr (CXM)
Market Cap: $1.38 billion
With a proprietary AI engine processing 450 million data points daily across 30+ digital channels, Sprinklr (NYSE: CXM) provides cloud-based software that helps large enterprises manage customer experiences across social, messaging, chat, and voice channels.
Why Do We Think CXM Will Underperform?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 6.9% underwhelmed
- Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
- Operating margin was unchanged over the last year, suggesting it failed to gain leverage on its fixed costs
At $5.59 per share, Sprinklr trades at 1.6x forward price-to-sales. If you’re considering CXM for your portfolio, see our FREE research report to learn more.
Cohen & Steers (CNS)
Market Cap: $3.42 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 Wary of CNS?
- Annual revenue growth of 5.4% over the last five years was below our standards for the financials sector
- Annual earnings per share growth of 3.7% underperformed its revenue over the last five years, showing its incremental sales were less profitable
Cohen & Steers’s stock price of $67.15 implies a valuation ratio of 20.1x forward P/E. Dive into our free research report to see why there are better opportunities than CNS.
One Stock to Buy:
LendingClub (LC)
Market Cap: $1.87 billion
Pioneering peer-to-peer lending in the US before evolving into a digital bank, LendingClub (NYSE: LC) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
Why Do We Love LC?
- Annual revenue growth of 25.7% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 79.1% annually, topping its revenue gains
LendingClub is trading at $16.33 per share, or 9.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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 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).
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