
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.
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 three mid-cap stocks to swipe left on and some alternatives you should look into instead.
Brown-Forman (BF.B)
Market Cap: $10.84 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 Does BF.B Fall Short?
- Products aren't resonating with the market as its revenue declined by 2% annually over the last three years
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Overall productivity fell over the last year as its plummeting sales were accompanied by a decline in its operating margin
Brown-Forman is trading at $23.53 per share, or 13.9x forward P/E. Check out our free in-depth research report to learn more about why BF.B doesn’t pass our bar.
Constellation Brands (STZ)
Market Cap: $26.28 billion
With a presence in more than 100 countries, Constellation Brands (NYSE: STZ) is a globally renowned producer and marketer of beer, wine, and spirits.
Why Does STZ Give Us Pause?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Sales are projected to tank by 2.9% over the next 12 months as demand evaporates further
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its decreasing returns suggest its historical profit centers are aging
Constellation Brands’s stock price of $151.80 implies a valuation ratio of 12.7x forward P/E. Read our free research report to see why you should think twice about including STZ in your portfolio.
Flutter Entertainment (FLUT)
Market Cap: $18.08 billion
With its digital fingerprints on nearly every aspect of global gambling, from the Super Bowl bettor to the online poker aficionado, Flutter Entertainment (NASDAQ: FLUT) operates a portfolio of leading online sports betting and gaming brands including FanDuel, PokerStars, Paddy Power, and Sky Betting & Gaming.
Why Do We Steer Clear of FLUT?
- The company has faced growth challenges as its 17.9% annual revenue increases over the last two years fell short of other consumer discretionary companies
- Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
- Poor free cash flow margin of 5.4% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $104.55 per share, Flutter Entertainment trades at 15x forward P/E. To fully understand why you should be careful with FLUT, check out our full research report (it’s free).
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