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.

Navigating this part of the market can be tricky, which is why we built StockStory to help you separate the winners from the laggards. That said, here is one Russell 2000 stock that could be a breakout winner and two best left off your watchlist.

Two Bank Stocks to Sell:

Triumph Financial (TFIN)

Market Cap: $1.38 billion

Originally focused on traditional banking before pivoting to serve the transportation sector, Triumph Financial (NYSE: TFIN) provides specialized financial services to the trucking industry, including payments processing, factoring, banking, and data intelligence solutions.

Why Should You Dump TFIN?

1. Net interest income trends were unexciting over the last five years as its 5.3% annual growth was below the typical banking firm
2. Net interest margin shrank by 131.8 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
3. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 19.1% annually

Triumph Financial is trading at $58.36 per share, or 1.5x forward P/B. Dive into our free research report to see why there are better opportunities than TFIN.

Stellar Bancorp (STEL)

Market Cap: $1.84 billion

Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE: STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.

Why Do We Pass on STEL?

1. Annual sales declines of 4.2% for the past two years show its products and services struggled to connect with the market during this cycle
2. 35.6 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position
3. Sales were less profitable over the last two years as its earnings per share fell by 15.1% annually, worse than its revenue declines

Stellar Bancorp’s stock price of $36.27 implies a valuation ratio of 1x forward P/B. Check out our free in-depth research report to learn more about why STEL doesn’t pass our bar.

One Bank Stock to Buy:

Pathward Financial (CASH)

Market Cap: $1.98 billion

Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ: CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.

Why Will CASH Beat the Market?

1. Unique value proposition resonates with borrowers, as seen in its above-market 13.9% annual net interest income growth over the last five years
2. Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

At $90.80 per share, Pathward Financial trades at 2.1x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.

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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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.