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. Keeping that in mind, here are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
onsemi (ON)
Market Cap: $21.22 billion
Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.
Why Do We Think Twice About ON?
- Sales tumbled by 12.5% annually over the last two years, showing market trends are working against its favor during this cycle
- Forecasted revenue decline of 4.5% for the upcoming 12 months implies demand will fall even further
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 4.3 percentage points
onsemi’s stock price of $51.95 implies a valuation ratio of 19.9x forward P/E. Read our free research report to see why you should think twice about including ON in your portfolio.
Brown-Forman (BF.B)
Market Cap: $14.55 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 Wary of BF.B?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Forecasted revenue decline of 3% for the upcoming 12 months implies demand will fall off a cliff
- Efficiency has decreased over the last year as its operating margin fell by 6 percentage points
Brown-Forman is trading at $30.85 per share, or 15.9x forward P/E. To fully understand why you should be careful with BF.B, check out our full research report (it’s free).
Jacobs Solutions (J)
Market Cap: $18.19 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 Should You Dump J?
- Annual sales declines of 2.5% for the past five years show its products and services struggled to connect with the market during this cycle
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 4% annually, worse than its revenue
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $152.18 per share, Jacobs Solutions trades at 22.7x forward P/E. If you’re considering J for your portfolio, see our FREE research report to learn more.
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