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. Keeping that in mind, here is one mid-cap stock with massive growth potential and two that may have trouble.
Two Mid-Cap Stocks to Sell:
Genuine Parts (GPC)
Market Cap: $14.07 billion
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Do We Steer Clear of GPC?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.1% for the last three years
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Operating margin of 4.5% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
Genuine Parts’s stock price of $107.88 implies a valuation ratio of 13.3x forward P/E. Dive into our free research report to see why there are better opportunities than GPC.
Deckers (DECK)
Market Cap: $15.88 billion
Established in 1973, Deckers (NYSE: DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Should You Dump DECK?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Subpar operating margin of 23.4% constrains its ability to invest in process improvements or effectively respond to new competitive threats
- Free cash flow margin is forecasted to shrink by 5.1 percentage points in the coming year, suggesting the company will consume more capital to keep up with its competitors
At $103.58 per share, Deckers trades at 14.1x forward P/E. Read our free research report to see why you should think twice about including DECK in your portfolio.
One Mid-Cap Stock to Buy:
Insulet (PODD)
Market Cap: $10.33 billion
Revolutionizing diabetes care with its tubeless "Pod" technology, Insulet (NASDAQ: PODD) develops and manufactures innovative insulin delivery systems for people with diabetes, primarily through its Omnipod product line.
Why Should You Buy PODD?
- Constant currency growth averaged 26.8% over the past two years, showing it can expand globally regardless of the macroeconomic environment
- Free cash flow margin jumped by 25.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Improving returns on capital reflect management’s ability to monetize investments
Insulet is trading at $145.50 per share, or 20.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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