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3 Russell 2000 Stocks We Find Risky
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.
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 are three Russell 2000 stocks that don’t make the cut and some better choices instead.
Janus (JBI)
Market Cap: $622.1 million
Standing out with its digital keyless entry into self-storage room technology, Janus (NYSE:JBI) is a provider of easily accessible self-storage solutions.
Why Is JBI Risky?
- Sales tumbled by 7.2% annually over the last two years, showing market trends are working against it during this cycle
- Earnings per share have contracted by 5.3% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Waning returns on capital imply its previous profit engines are losing steam
Janus is trading at $4.63 per share, or 6.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including JBI in your portfolio.
SmartRent (SMRT)
Market Cap: $222.3 million
Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 16.6% annually over the last two years
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- Cash-burning history makes us doubt the long-term viability of its business model
SmartRent’s stock price of $1.18 implies a valuation ratio of 29.3x forward EV-to-EBITDA. To fully understand why you should be careful with SMRT, check out our full research report (it’s free).
RUM Group (RUM)
Market Cap: $3.2 billion
Founded in 2013 as a champion for content creator rights and free expression, RUM Group (NASDAQ:RUM) is a video sharing platform that positions itself as a free speech alternative to mainstream platforms, offering creators more favorable revenue-sharing opportunities.
Why Does RUM Worry Us?
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $7.96 per share, RUM Group trades at 39.2x forward EV-to-EBITDA. If you’re considering RUM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.