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.
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 two mid-cap stocks with long growth runways and one best left ignored.
One Mid-Cap Stock to Sell:
Saia (SAIA)
Market Cap: $11.94 billion
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.
Why Does SAIA Worry Us?
- Underwhelming tons shipped over the past two years indicate demand is soft and that the company may need to revise its strategy
- Low free cash flow margin of -0.2% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
- Eroding returns on capital suggest its historical profit centers are aging
At $449.04 per share, Saia trades at 34.2x forward P/E. Check out our free in-depth research report to learn more about why SAIA doesn’t pass our bar.
Two Mid-Cap Stocks to Watch:
Five Below (FIVE)
Market Cap: $13.02 billion
Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.
Why Could FIVE Be a Winner?
- Aggressive strategy of rolling out new stores to gobble up whitespace is prudent given its same-store sales growth
- Comparable store sales rose by 4.8% on average over the past two years, demonstrating its ability to drive increased spending at existing locations
- Free cash flow margin jumped by 5.9 percentage points over the last year, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Five Below’s stock price of $235.79 implies a valuation ratio of 27.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
ITT (ITT)
Market Cap: $19.16 billion
Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE: ITT) provides motion and fluid handling equipment for various industries
Why Will ITT Beat the Market?
- Annual revenue growth of 9.7% over the last five years beat the sector average and underscores the unique value of its offerings
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 34.8%
- Free cash flow margin expanded by 17.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
ITT is trading at $214.59 per share, or 27.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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