In this article, we explore the 12 Best Russell 2000 Stocks to Buy Now.
In its Weekly Market Monitor report for the week ending August 8, 2025, Goldman Sachs noted that U.S. equities had firmly recovered from their April lows. The report cited the Bloomberg Magnificent 7 index, which rose 7.8%, and the S&P 500 index, which gained 8.7%. A substantial portion of the rally was attributed to increased retail activity, with stocks popular among retail investors climbing 50% from early April levels. Many of these names are components of the small-cap-focused Russell 2000 Index.
By the week ending August 14, market leadership had shifted from the Magnificent 7 to small caps. Over the five trading days ending August 14, the Russell 2000 advanced 3.43%, outpacing the S&P 500’s 1.78% gain, which was held back by large-cap tech stocks. For context, the Bloomberg Magnificent 7 Index rose just 0.42% in the same period.
According to Larry Tentarelli of Blue Chip Trend Report, small caps are well-positioned to benefit from potential monetary easing. “If the Fed cuts rates in September, this would greatly benefit small caps, as many small caps are levered to the economy and also financially,” he told CNBC. Tentarelli described small caps as a “rate cut rotation” play.
With small caps gaining momentum and potentially poised for further upside, the following analysis highlights 12 Russell 2000 stocks that stand out in the current environment.
A man in black suit holding a tablet looks at stock market data on a monitor. Photo by Tima Miroshnichenko on Pexels
Our Methodology
To identify the 12 Best Russell 2000 Stocks to Buy Now, we used the Finviz screener to select Russell 2000 constituents with a market capitalization above $5 billion. From this group, we focused on companies that had delivered year-to-date (YTD) returns of at least 50% as of August 18, 2025. Next, we considered hedge fund interest in these companies using data from Insider Monkey’s Q1 2025 database. We then ranked the qualifying stocks based on YTD returns, sorted in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Best Russell 2000 Stocks to Buy Now
12. Dycom Industries, Inc. (NYSE:DY)
Year-To-Date Returns: 54.14%
Market Capitalization: $7.88 billion
Number of Hedge Fund Holders: 36
Dycom Industries, Inc. (NYSE:DY) is one of the best Russell 2000 stocks to buy now. On July 16, KeyBanc Capital Markets increased its price target for Dycom stock to $295, up from $255. The firm maintained its “Overweight” rating on Dycom’s shares, citing the company’s strong sector positioning and the expectation that telecom infrastructure investments will remain high in the years to come.
Specifically, KeyBanc highlighted Dycom’s position at the start of a multi-year telecom investment expansion. Dycom, the analysts stated, has made robust private investments in fiber. Add to that the ongoing federal and state-funded rural broadband programs, as well as aggressive data center-led fiber builds. KeyBanc expects these initiatives to drive elevated spending in the industry for several years.
The analysts also noted Dycom’s national reach and scale in wireline construction. They stated that this fact gives the company an advantage in competing for contracts and capturing incremental growth opportunities. In that regard, KeyBanc noted that Dycom, as a “telecom pure-play trading at approximately 11.3x FY27 estimates,” does not have its longer-than-usual growth cycle fully reflected in its current valuation.
Dycom Industries, Inc. (NYSE:DY) is a specialty contracting company. It provides engineering, construction, maintenance, and installation services for telecommunications and utility infrastructure. The company operates across the United States, serving major telecommunications providers, cable operators, and utility companies through a network of field offices staffed by over 15,000 employees.
11. AeroVironment, Inc. (NASDAQ:AVAV)
Year-To-Date Returns: 59.15%
Market Capitalization: $12.43 billion
Number of Hedge Fund Holders: 23
AeroVironment, Inc. (NASDAQ:AVAV) is one of the best Russell 2000 stocks to buy now. On August 7, the company announced that it had formed a strategic partnership with Sierra Nevada Corporation (SNC) to develop an advanced air and missile defense system for the Golden Dome for America (GDA) initiative.
The GDA initiative aims to create a layered, integrated air and missile defense system to protect critical U.S. infrastructure from a range of aerial threats. It focuses on “limited-area ‘under-dome’ protection” with the potential to expand coverage as new technologies are integrated.
The planned defense system will use a mix of kinetic and directed energy solutions, radio frequency systems, electronic warfare, cyber capabilities, and both passive and active sensors. It is designed to neutralize a broad range of aerial threats, including Group 1-4 unmanned aerial systems (UASs, also known as drones), advanced cruise missiles, hybrid aerial threats, and coordinated drone attacks. Sierra Space, SNC’s sister company, is also involved and is exploring ways to leverage space-based platforms for early warning, target tracking, and interceptor guidance.
AeroVironment, Inc. (NASDAQ:AVAV) is an American defense contractor and unmanned aircraft systems manufacturer. It designs, develops, and supplies small drones and tactical missile systems primarily to the U.S. Department of Defense and allied nations. The company specializes in intelligence, surveillance, and reconnaissance (ISR) solutions, with its Puma and Switchblade systems widely deployed in military operations.
10. Credo Technology Group Holding Ltd. (NASDAQ:CRDO)
Year-To-Date Returns: 65.51%
Market Capitalization: $20.17 billion
Number of Hedge Fund Holders: 41
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is one of the best Russell 2000 stocks to buy now. On August 13, Mizuho Securities raised its price target for Credo Technology stock to $135, up from $112. The analysts kept the “Outperform” rating on the company, citing Credo Technology’s expected benefits from artificial intelligence (AI) server deployments at Microsoft, xAI, and Amazon. Additionally, Mizuho anticipates that Credo Technology will add two key customers by the end of fiscal 2026, which the analysts believe will enhance the company’s revenue profile.
Mizuho kept its quarterly and fiscal year estimates unchanged: July quarter estimates remain at $190 million in revenue and $0.37 EPS, while full fiscal 2026 projections are $860 million in revenue and $1.65 EPS, with fiscal 2027 estimates of $1.17 billion and $2.28, respectively.
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is a fabless semiconductor company. It designs and develops high-speed connectivity solutions for data centers, enterprise networks, and AI infrastructure. The company’s products include serializer/deserializer (SerDes) chiplets, active electrical cables, and optical DSPs that enable efficient data transfer across hyperscale environments.
9. Sterling Infrastructure, Inc. (NASDAQ:STRL)
Year-To-Date Returns: 67.90%
Market Capitalization: $8.57 billion
Number of Hedge Fund Holders: 30
Sterling Infrastructure, Inc. (NASDAQ:STRL) is one of the best Russell 2000 stocks to buy now. On August 5, DA Davidson reaffirmed its “Buy” rating on Sterling. The firm maintained the $265 price target for the stock, citing a stronger-than-expected earnings report.
Sterling reported its Q2 2025 earnings on August 4, delivering adjusted earnings per share (EPS) of $2.69. The EPS was well above both DA Davidson’s estimate of $2.36 and the broader consensus estimate of $2.25. Revenue reached $614.5 million, outperforming DA Davidson’s projection of $552.0 million and the consensus estimate of $554.4 million.
DA Davidson noted that Sterling achieved an adjusted EBITDA of $125.7 million, exceeding its estimate of $114.2 million. As a result of the earnings beat, Sterling increased its full-year guidance, excluding the potential impact of the pending CEC acquisition. The analysts emphasized that their positive outlook is based on the “continued strong performance” and “climbing margins” in Sterling’s E-Infrastructure segment.
Sterling Infrastructure, Inc. (NASDAQ:STRL) is a construction and infrastructure services company. It operates through three segments: Transportation, Building Solutions, and E-Infrastructure. The company specializes in heavy civil construction projects, including highways, bridges, and airports, and also provides site development services for data centers, warehouses, and distribution hubs.
Hedge Fund Resource Center