Gold mines of small corporations: A tricky search for returns

Eulerpool Research Systems Jun 18, 2025

Takeaways NEW

  • Small capital companies can potentially offer high returns despite risks.
  • Informed Stock Selection in Small Businesses is Crucial for Optimizing Returns.
Small-cap companies in the Russell 2000 Index can be true goldmines for investors looking to invest beyond well-known large corporations. However, these companies offer less stability and resources compared to their larger counterparts and therefore face greater challenges in scaling their business models. Selecting the right small-cap companies is not an easy task, which is why StockStory was created to focus on the best opportunities. Below, we look at three Russell 2000 stocks that investors might want to avoid and present alternatives that can be considered instead. With a market value of $1.48 billion, Energizer, the inventor of the famous Energizer Bunny mascot, is in focus. The stock is currently trading with a P/E ratio of 5.6, already reflecting the challenges of these large battery manufacturers. Another example is the American consumer goods company WD-40, world-renowned for its versatile spray. Here, the valuation with a P/E ratio of 42.5 stands out. Despite the impressive utility of its product, the long-term growth prospects from an investor's perspective remain controversial. Evolent Health, a provider of specialized health services, was founded in 2011 to revolutionize the care of patients with complex diseases. Despite an attractive market value of $983.7 million and a proposed P/E ratio of 15.3, skepticism remains regarding its growth potential. Apart from the companies mentioned above, there are high-quality stocks that stand out from the general market trend. One example is Nvidia's impressive success story, which has grown by 1,545% since 2020. Companies like Tecnoglass, formerly a microcap, have also achieved a remarkable five-year return increase of 1,754%. These numerical examples illustrate the potential inherent in targeted stock selection and underscore the importance of informed decision-making in small companies on the path to optimizing returns.

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