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.
This is precisely where StockStory comes in – we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are two mid-cap stocks with massive growth potential and one that could be down big.
One Mid-Cap Stock to Sell:
Stanley Black & Decker (SWK)
Market Cap: $12.67 billion
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Why Should You Dump SWK?
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Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
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Incremental sales over the last five years were much less profitable as its earnings per share fell by 9.6% annually while its revenue grew
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Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.7 percentage points
Stanley Black & Decker’s stock price of $81.54 implies a valuation ratio of 16x forward P/E. Check out our free in-depth research report to learn more about why SWK doesn’t pass our bar.
Two Mid-Cap Stocks to Watch:
Guidewire Software (GWRE)
Market Cap: $13.76 billion
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE:GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Do We Like GWRE?
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Billings have averaged 20.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
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User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
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Has the option to reinvest or return capital to investors as its 21.3% free cash flow margin is well above its peers
Guidewire Software is trading at $161.91 per share, or 9.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
DexCom (DXCM)
Market Cap: $28.6 billion
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.