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.
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 two Russell 2000 stocks that could be the next breakout winners and one best left off your watchlist.
One Stock to Sell:
Amphastar Pharmaceuticals (AMPH)
Market Cap: $1.19 billion
Founded in 1996 and known for its expertise in complex drug formulations, Amphastar Pharmaceuticals (NASDAQ:AMPH) develops and manufactures technically challenging injectable and inhalation medications, including both generic and proprietary pharmaceutical products.
Why Are We Wary of AMPH?
- Smaller revenue base of $723.3 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Expenses have increased as a percentage of revenue over the last two years as its adjusted operating margin fell by 4.3 percentage points
Amphastar Pharmaceuticals’s stock price of $25.89 implies a valuation ratio of 7.5x forward P/E. Read our free research report to see why you should think twice about including AMPH in your portfolio.
Two Stocks to Watch:
Shake Shack (SHAK)
Market Cap: $3.19 billion
Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.
Why Is SHAK on Our Radar?
- Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
- Average same-store sales growth of 3% over the past two years indicates its restaurants are resonating with diners
- Operating margin expanded by 4.6 percentage points over the last year as it scaled and became more efficient
Shake Shack is trading at $79.68 per share, or 50.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
German American Bancorp (GABC)
Market Cap: $1.53 billion
Founded in 1910 during a wave of community banking expansion in the Midwest, German American Bancorp (NASDAQ:GABC) is a financial holding company that provides banking, wealth management, and insurance services across southern Indiana and Kentucky.
Why Does GABC Stand Out?
- Net interest margin grew by 35 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more chips to play with
- Operating profits are forecasted to increase over the next year as it scales and becomes more productive
- Annual tangible book value per share growth of 26.1% over the last two years was superb and indicates its capital strength increased during this cycle
At $40.88 per share, German American Bancorp trades at 1.3x forward P/B. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
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 9 Market-Beating Stocks. 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 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
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