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 the next big thing and two that may struggle to keep up.

Two Stocks to Sell:

Central Garden & Pet (CENT)

Market Cap: $2.06 billion

Enhancing the lives of both pets and homeowners, Central Garden & Pet (NASDAQ: CENT) is a leading producer and distributor of essential products for pet care, lawn and garden maintenance, and pest control.

Why Do We Avoid CENT?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Estimated sales for the next 12 months are flat and imply a softer demand environment
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up

Central Garden & Pet is trading at $35.61 per share, or 13.2x forward P/E. Check out our free in-depth research report to learn more about why CENT doesn’t pass our bar.

Sabre (SABR)

Market Cap: $757.5 million

Originally a division of American Airlines, Sabre (NASDAQ: SABR) is a technology provider for the global travel and tourism industry.

Why Do We Think Twice About SABR?

1. Demand for its offerings was relatively low as its number of central reservation system transactions has underwhelmed
2. Negative free cash flow raises questions about the return timeline for its investments
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

At $1.89 per share, Sabre trades at 6x forward P/E. Dive into our free research report to see why there are better opportunities than SABR.

One Stock to Watch:

Dycom (DY)

Market Cap: $7.4 billion

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE: DY) builds and maintains telecommunications infrastructure.

Why Are We Fans of DY?

1. Market share has increased this cycle as its 11.1% annual revenue growth over the last two years was exceptional
2. Operating margin expanded by 5.1 percentage points over the last five years as it scaled and became more efficient
3. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 18% exceeded its revenue gains over the last two years

Dycom’s stock price of $255.59 implies a valuation ratio of 25.2x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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