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 are two mid-cap stocks with long growth runways and one best left ignored.
One Mid-Cap Stock to Sell:
Tapestry (TPR)
Market Cap: $15.09 billion
Originally founded as Coach, Tapestry (NYSE: TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.
Why Does TPR Worry Us?
- Annual revenue growth of 1.4% over the last two years was below our standards for the consumer discretionary sector
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Estimated sales growth of 3% for the next 12 months is soft and implies weaker demand
Tapestry is trading at $72 per share, or 14.7x forward price-to-earnings. To fully understand why you should be careful with TPR, check out our full research report (it’s free).
Two Mid-Cap Stocks to Watch:
Dynatrace (DT)
Market Cap: $14.86 billion
Founded in Austria in 2005, Dynatrace (NYSE: DT) provides companies with software that allows them to monitor the performance of their full technology stack, from software applications to the infrastructure they run on.
Why Could DT Be a Winner?
- ARR growth averaged 18.9% over the last year, showing customers are willing to take multi-year bets on its offerings
- Software is difficult to replicate at scale and leads to a stellar gross margin of 82.2%
- Robust free cash flow margin of 24.9% gives it many options for capital deployment
Dynatrace’s stock price of $49.50 implies a valuation ratio of 8.1x forward price-to-sales. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Brown-Forman (BF.B)
Market Cap: $16.39 billion
Best known for its Jack Daniel’s whiskey, Brown-Forman (NYSE: BF.B) is an alcoholic beverage company with a broad portfolio of brands in wines and spirits.
Why Are We Fans of BF.B?
- Unique products and pricing power lead to a best-in-class gross margin of 60.2%
- Highly efficient business model is illustrated by its impressive 28.6% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $34.75 per share, Brown-Forman trades at 16.9x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
