Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here is one mid-cap stock with a long growth runway and two best left ignored.
Two Mid-Cap Stocks to Sell:
BJ’s (BJ)
Market Cap: $11.94 billion
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Are We Cautious About BJ?
-
Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4% over the last three years was below our standards for the consumer retail sector
-
Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.5% that must be offset through higher volumes
-
Subpar operating margin of 3.8% constrains its ability to invest in process improvements or effectively respond to new competitive threats
BJ’s is trading at $93.89 per share, or 20x forward P/E. If you’re considering BJ for your portfolio, see our FREE research report to learn more.
Charles River Laboratories (CRL)
Market Cap: $13.43 billion
Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE:CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.
Why Is CRL Risky?
-
Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
-
Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
-
Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $284.51 per share, Charles River Laboratories trades at 23.1x forward P/E. To fully understand why you should be careful with CRL, check out our full research report (it’s free).
One Mid-Cap Stock to Watch:
Advanced Energy (AEIS)
Market Cap: $13.2 billion
Pioneering technologies for radio frequency power delivery, Advanced Energy (NASDAQ:AEIS) provides power supplies, thermal management systems, and measurement and control instruments for various manufacturing processes.