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Russell Rebalance: 3 Stocks Ready to Move Higher

Investors pay close attention to the quarterly rebalancing of the S&P 500 index for good reason. First, the stocks in the S&P 500 make up approximately 80% of the total U.S. equity market.

Second, when a stock is added to the index, it frequently leads to increased institutional buying, which can lift the stock price. That was the case in 2024, when Palantir Technologies Inc. (NASDAQ: PLTR) was added to the index.

However, investors with an interest in small- to mid-cap stocks are paying close attention to the Russell Reconstitution. This multi-week period will end on June 27, when the index rebalances its holdings.

Stocks can move up if they meet a strict set of criteria. Three stocks currently in the Russell 2000 are garnering interest as stocks that could move up to the Russell 1000, which could cause a sharp move higher.

However, investors should wait for the formal announcement. Investors saw the drop in Robinhood Markets Inc. (NASDAQ: HOOD) stock after it was denied entry into the S&P 500.

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SHM Stock Is Well Positioned as a Buy-the-Dip Opportunity

Sprout’s Farmers Market Inc. (NASDAQ: SFM) is a retailer of fresh, natural, and organic food products. SFM stock is up more than 500% in the last five years. That coincides with the trend of Americans becoming more health-conscious and mindful of where their food comes from.

That trend will continue as part of the Make America Healthy Again (MAHA) movement. But there’s another catalyst for Sprout's. The company’s core customer base has more disposable income, which has made that demographic less sensitive to rising food costs.

SFM stock has increased more than 100% in the last 12 months, pushing its market cap to around $15 billion. With a price-to-earnings (P/E) ratio of over 25x, the stock is expensive compared to mainstream grocery stocks such as The Kroger Co. (NYSE: KR). However, investors should consider the company’s niche focus, which is likely to limit the stock's headwinds.

After coming close to its all-time high in late May, SFM stock is down about 3.6% in the last month. That has the stock right around its 50- and 100-day simple moving averages, which could serve as support.

Institutions Are Front-Running This Biotech Stock

Insmed Inc. (NASDAQ: INSM) is on fire in the last month, climbing over 47%. The catalyst was positive Phase IIb trial data for its treprostinil palmitil inhalation powder (TPIP) in treating pulmonary arterial hypertension (PAH). The drug achieved its primary and all secondary endpoints and was described as a “home run” compared to competitors.

Insmed also announced a $750 million capital raise. This will help it expand its pipeline and get drugs across through the clinical trial process.

That said, investors should consider that the rally in INSM stock may be extended. With short interest over 10%, some of this run-up is likely due to short covering. Investors should also note that the company already has a drug in market. Revenue is increasing year-over-year (YOY), but Insmed is still years away from profitability.

Nevertheless, institutional investors have increased their buying in the last two quarters. That aligns with analyst sentiment, which has become more bullish since the company’s last earnings report in May.

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This Aerospace Stock Is Ready to Soar Higher

Much of the attention in aerospace stocks in 2025 has focused on the space sector or the emerging eVTOL category. However, FTAI Aviation Inc. (NASDAQ: FTAI) is one of the best-performing stocks in the last month, climbing 8.9%.

The growth has been spurred by increased demand for jet engine leasing, specifically the CFM56 engine and aftermarket services.

The recent rally is helping to offset the sharp sell-off of FTAI stock to begin the year after the company was the target of a short report by the firm Muddy Waters. The report alleged the company was misleading investors by representing one-time engine sales as MRO (maintenance, repair, and overhaul) revenue to get higher multiples than it would from traditional leasing.

Technicians will note that FTAI stock recently crossed over its 200-day SMA, which is typically a sign of bullish momentum. However, the stock is still down over 10% in 2025, but analysts have been raising their price targets. However, FTAI stock is still trading in the middle of the high and low of that range, so there could still be some upside for investors.

Written by Chris Markoch

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