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 is one Russell 2000 stock that could deliver strong gains and two that may face some trouble.
Two Stocks to Sell:
Camping World (CWH)
Market Cap: $628.2 million
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE: CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Why Should You Dump CWH?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Earnings per share decreased by more than its revenue over the last three years, showing each sale was less profitable
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
Camping World’s stock price of $10.04 implies a valuation ratio of 14x forward P/E. If you’re considering CWH for your portfolio, see our FREE research report to learn more.
Shoals (SHLS)
Market Cap: $1.45 billion
Started in Huntsville, Alabama, Shoals (NASDAQ: SHLS) designs and manufactures products that make solar energy systems work more efficiently.
Why Do We Think Twice About SHLS?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.1% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 27.6% annually, worse than its revenue declines
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $8.76 per share, Shoals trades at 17.8x forward P/E. Dive into our free research report to see why there are better opportunities than SHLS.
One Stock to Buy:
HCI Group (HCI)
Market Cap: $2.42 billion
Starting as a Florida "take-out" insurer that assumed policies from the state-backed Citizens Property Insurance Corporation, HCI Group (NYSE: HCI) provides property and casualty insurance, primarily homeowners coverage, while leveraging proprietary technology to improve underwriting and claims processing.
Why Is HCI a Top Pick?
- Market penetration was impressive this cycle as its net premiums earned expanded by 28% annually over the last two years
- Impressive 65.1% annual book value per share growth over the last two years indicates it’s building equity value this cycle
- Notable projected book value per share growth of 36.9% for the next 12 months hints at strong capital generation
HCI Group is trading at $185.50 per share, or 2.6x forward P/B. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 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.
