Mid-cap stocks have the best odds of scaling into $100 billion corporations thanks to their tested business models and large addressable markets. But the many opportunities in front of them attract significant competition, spanning from industry behemoths with seemingly infinite resources to small, nimble players with chips on their shoulders.
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 is one mid-cap stock with huge upside potential and two that may have trouble.
Two Mid-Cap Stocks to Sell:
Leidos (LDOS)
Market Cap: $18.02 billion
Formed through the split of IT services company SAIC, Leidos (NYSE:LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Does LDOS Give Us Pause?
- New orders were hard to come by as its average backlog growth of 5.3% over the past two years underwhelmed
- Estimated sales growth of 3.2% for the next 12 months implies demand will slow from its two-year trend
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 1.9 percentage points
Leidos is trading at $137.38 per share, or 12.9x forward price-to-earnings. If you’re considering LDOS for your portfolio, see our FREE research report to learn more.
Mettler-Toledo (MTD)
Market Cap: $27.07 billion
Founded in 1945, Mettler-Toledo (NYSE:MTD) designs and manufactures precision instruments and services for use across healthcare research, quality control, production, and retail.
Why Do We Think Twice About MTD?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
At $1,306 per share, Mettler-Toledo trades at 30.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why MTD doesn’t pass our bar.
One Mid-Cap Stock to Watch:
Centene (CNC)
Market Cap: $29.48 billion
Founded in 1984 as a single health plan to serve those in need, Centene (NYSE:CNC) today serves under-insured and uninsured families to provide primary care and hospitalization to behavioral health and pharmacy benefits healthcare coverage.
Why Does CNC Stand Out?
- Market share has increased this cycle as its 16.9% annual revenue growth over the last five years was exceptional
- Unparalleled scale of $163.1 billion in revenue enables it to spread administrative costs across a larger membership base
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Centene’s stock price of $59.49 implies a valuation ratio of 8.3x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth 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 6 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
