Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names. But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
Picking the right small caps isn’t easy, and that’s exactly why StockStory exists - to help you focus on the best opportunities. That said, here is one Russell 2000 stock that could be a breakout winner and two that may face some trouble.
Two Stocks to Sell:
Carriage Services (CSV)
Market Cap: $694.1 million
Established in 1991, Carriage Services (NYSE: CSV) is a provider of funeral and cemetery services in the United States.
Why Do We Avoid CSV?
- 3.6% annual revenue growth over the last five years was slower than its consumer discretionary peers
- Low free cash flow margin of 10.4% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Stagnant returns on capital show management has failed to improve the company’s business quality
Carriage Services’s stock price of $43.73 implies a valuation ratio of 12.4x forward P/E. To fully understand why you should be careful with CSV, check out our full research report (it’s free).
Pangaea (PANL)
Market Cap: $524.6 million
Established in 1996, Pangaea Logistics (NASDAQ: PANL) specializes in global logistics and transportation services, focusing on the shipment of dry bulk cargoes.
Why Is PANL Not Exciting?
- Efficiency has decreased over the last five years as its operating margin fell by 5.4 percentage points
- Falling earnings per share over the last four years has some investors worried as stock prices ultimately follow EPS over the long term
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Pangaea is trading at $7.86 per share, or 0.8x trailing 12-month price-to-sales. If you’re considering PANL for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Mirion (MIR)
Market Cap: $4.49 billion
With its technology protecting workers in over 130 countries and equipment used in 80% of cancer centers worldwide, Mirion Technologies (NYSE: MIR) provides radiation detection, measurement, and monitoring solutions for medical, nuclear energy, defense, and scientific research applications.
Why Is MIR a Good Business?
- Annual revenue growth of 10.8% over the past five years was outstanding, reflecting market share gains this cycle
- Adjusted operating margin expanded by 10.5 percentage points over the last five years as it scaled and became more efficient
- Free cash flow margin expanded by 8.7 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $17.99 per share, Mirion trades at 4.6x trailing 12-month price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
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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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
