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1 Russell 2000 Stock on Our Buy List and 2 We Avoid

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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. That said, here is one Russell 2000 stock that could be the next big thing and two best left off your watchlist.

Two Stocks to Sell:

Murphy Oil (MUR)

Market Cap: $5.37 billion

Operating in waters over a mile deep in the Gulf of Mexico and extracting hydrocarbons from tight shale rock formations in Texas, Murphy Oil (NYSE: MUR) explores for and produces crude oil, natural gas, and natural gas liquids from fields in North America and Asia.

Why Are We Hesitant About MUR?

  1. Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 5.1 percentage points

Murphy Oil is trading at $37.49 per share, or 11.6x forward P/E. If you’re considering MUR for your portfolio, see our FREE research report to learn more.

United Natural Foods (UNFI)

Market Cap: $2.70 billion

With a vast network of 55 distribution centers spanning approximately 30 million square feet of warehouse space, United Natural Foods (NYSE: UNFI) is North America's premier grocery wholesaler distributing natural, organic, and conventional products to over 30,000 retail locations across the US and Canada.

Why Do We Pass on UNFI?

  1. Flat sales over the last three years suggest it must innovate and find new ways to grow
  2. Gross margin of 13.4% is an output of its commoditized products
  3. Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging

United Natural Foods’s stock price of $45.30 implies a valuation ratio of 13.4x forward P/E. To fully understand why you should be careful with UNFI, check out our full research report (it’s free).

One Stock to Buy:

ServisFirst Bancshares (SFBS)

Market Cap: $4.35 billion

Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.

Why Will SFBS Beat the Market?

  1. Impressive 19.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
  2. Net interest margin increased by 71.1 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more capital to invest or return to shareholders
  3. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 25.7% annually, topping its revenue gains

At $39.75 per share, ServisFirst Bancshares trades at 2.1x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

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