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. Keeping that in mind, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.
Market Cap: $108.7 million
Sold in over 75 countries around the world, Hain Celestial (NASDAQ:HAIN) is a natural and organic food company whose products range from snacks to teas to baby food.
Why Do We Steer Clear of HAIN?
Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 61.4% annually, worse than its revenue
High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $1.21 per share, Hain Celestial trades at 7.7x forward P/E. Read our free research report to see why you should think twice about including HAIN in your portfolio, it’s free for active Edge members.
Market Cap: $731.2 million
Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.
Why Should You Dump GNK?
Performance surrounding its owned vessels has lagged its peers
Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
23.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Genco’s stock price of $16.91 implies a valuation ratio of 13.3x forward P/E. If you’re considering GNK for your portfolio, see our FREE research report to learn more.
Market Cap: $4.73 billion
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE:MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Why Are We Bullish on MC?
Impressive 32.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
Additional sales over the last two years increased its profitability as the 299% annual growth in its earnings per share outpaced its revenue
Stellar return on equity showcases management’s ability to surface highly profitable business ventures
finance.yahoo.com
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