Mid-cap stocks often strike the right balance between having proven business models and market opportunities that can support $100 billion corporations. However, they face intense competition from scaled industry giants and can be disrupted by new innovative players vying for a slice of the pie.
These dynamics can rattle even the most seasoned professionals, which is why we started StockStory – to help you separate the good companies from the bad. That said, here is one mid-cap stock with a long growth runway and two best left ignored.
Two Mid-Cap Stocks to Sell:
Graco (GGG)
Market Cap: $12.64 billion
Founded in 1926, Graco (NYSE:GGG) is an industrial company specializing in the development and manufacturing of fluid-handling systems and products.
Why Are We Hesitant About GGG?
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Muted 2.1% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
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Flat earnings per share over the last two years lagged its peers
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Waning returns on capital imply its previous profit engines are losing steam
At $76.18 per share, Graco trades at 23.8x forward P/E. If you’re considering GGG for your portfolio, see our FREE research report to learn more.
Jacobs Solutions (J)
Market Cap: $13.42 billion
With a workforce of approximately 45,000 professionals tackling complex challenges from water scarcity to cybersecurity, Jacobs Solutions (NYSE:J) provides engineering, consulting, and technical services focused on infrastructure, sustainability, and advanced technology solutions.
Why Do We Think J Will Underperform?
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Annual sales declines of 6.2% for the past five years show its products and services struggled to connect with the market during this cycle
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Earnings per share have dipped by 6.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term
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Low returns on capital reflect management’s struggle to allocate funds effectively
Jacobs Solutions’s stock price of $114.19 implies a valuation ratio of 14.4x forward P/E. Read our free research report to see why you should think twice about including J in your portfolio, it’s free.
One Mid-Cap Stock to Buy:
Natera (NTRA)
Market Cap: $27.57 billion
Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ:NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.
Why Is NTRA a Top Pick?
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Average unit sales growth of 19.4% over the past two years reflects steady demand for its products
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Adjusted operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage
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Free cash flow margin is now positive, indicating the company has passed a significant test