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.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. Keeping that in mind, here is one mid-cap stock with massive growth potential and two best left ignored.
Two Mid-Cap Stocks to Sell:
Somnigroup (SGI)
Market Cap: $13.4 billion
Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE: SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products
Why Are We Hesitant About SGI?
- Sales trends were unexciting over the last two years as its 4.6% annual growth was below the typical consumer discretionary company
- Eroding returns on capital suggest its historical profit centers are aging
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate
At $64.80 per share, Somnigroup trades at 22.4x forward P/E. If you’re considering SGI for your portfolio, see our FREE research report to learn more.
Hyatt Hotels (H)
Market Cap: $12.88 billion
Founded in 1957, Hyatt Hotels (NYSE: H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Do We Avoid H?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Anticipated sales growth of 3.4% for the next year implies demand will be shaky
- Negative returns on capital show that some of its growth strategies have backfired
Hyatt Hotels is trading at $134.91 per share, or 42x forward P/E. To fully understand why you should be careful with H, check out our full research report (it’s free).
One Mid-Cap Stock to Watch:
RBC Bearings (RBC)
Market Cap: $11.39 billion
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Is RBC Interesting?
- Impressive 17.4% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Healthy operating margin of 19.8% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
- Earnings per share have massively outperformed its peers over the last two years, increasing by 22.1% annually
RBC Bearings’s stock price of $367.93 implies a valuation ratio of 34.8x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
