Small-cap stocks in the Russell 2000 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. Keeping that in mind, here are three Russell 2000 stocks to avoid and better alternatives to consider.

Wiley (WLY)

Market Cap: $2.30 billion

With roots dating back to 1807 when Charles Wiley opened a small printing shop in Manhattan, John Wiley & Sons (NYSE:WLY) is a global academic publisher that provides scientific journals, books, digital courseware, and knowledge solutions for researchers, students, and professionals.

Why Should You Sell WLY?

1. Sales tumbled by 1.6% annually over the last five years, showing market trends are working against its favor during this cycle

2. Flat earnings per share over the last two years lagged its peers

3. Free cash flow margin dropped by 4.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up

At $42.70 per share, Wiley trades at 17.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why WLY doesn’t pass our bar .

Pediatrix Medical Group (MD)

Market Cap: $1.12 billion

With a network of approximately 2,620 affiliated physicians caring for some of the most vulnerable patients, Pediatrix Medical Group (NYSE:MD) provides specialized physician services focused on neonatal, maternal-fetal, pediatric cardiology and other pediatric subspecialty care across 37 states.

Why Do We Pass on MD?

1. Lagging comparable store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

2. Projected sales decline of 7.2% for the next 12 months points to a tough demand environment ahead

3. Earnings per share fell by 4.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable

Pediatrix Medical Group is trading at $13.59 per share, or 8.6x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than MD .

Telephone and Data Systems (TDS)

Market Cap: $4.19 billion

Operating primarily through its majority-owned subsidiary UScellular and wholly-owned TDS Telecom, Telephone and Data Systems (NYSE:TDS) provides wireless, broadband, video, and voice communications services to 4.6 million wireless and 1.2 million broadband customers across the United States.