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.

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 struggle to keep up.

Market Cap: $2.43 billion

Processing over 325 billion data points annually from more than 150 million connected devices, Alarm.com (NASDAQ:ALRM) provides cloud-based platforms that enable residential and commercial property owners to remotely monitor and control their security, video, energy, and other connected devices.

Why Do We Steer Clear of ALRM?

Customers had second thoughts about committing to its platform over the last year as its average billings growth of 7% underwhelmed

Estimated sales growth of 3.7% for the next 12 months implies demand will slow from its two-year trend

Operating margin improvement of 1.9 percentage points over the last year demonstrates its ability to scale efficiently

Alarm.com’s stock price of $48.77 implies a valuation ratio of 2.8x forward price-to-sales. If you’re considering ALRM for your portfolio, see our FREE research report to learn more.

Market Cap: $1.52 billion

Known for its delicious pineapples and Hawaiian roots, Dole (NYSE:DOLE) is a global agricultural company specializing in fresh fruits and vegetables.

Why Are We Out on DOLE?

Sales stagnated over the last three years and signal the need for new growth strategies

Gross margin of 8.2% is an output of its commoditized products

Operating margin of 2.7% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments

Dole is trading at $15.49 per share, or 11.1x forward P/E. Dive into our free research report to see why there are better opportunities than DOLE.

Market Cap: $4.13 billion

The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE:AIR) is a provider of aircraft maintenance services

Why Does AIR Stand Out?

Annual revenue growth of 17% over the past two years was outstanding, reflecting market share gains this cycle

Market share will likely rise over the next 12 months as its expected revenue growth of 15.6% is robust

Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 17.9% annually

At $106.00 per share, AAR trades at 21x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

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 5 Strong Momentum 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.