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 are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
APi (APG)
Market Cap: $14.91 billion
Started in 1926 as an insulation contractor, APi (NYSE: APG) provides life safety solutions and specialty services for buildings and infrastructure.
Why Does APG Worry Us?
- Muted 4.2% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Underwhelming 3.3% return on capital reflects management’s difficulties in finding profitable growth opportunities
APi’s stock price of $35.63 implies a valuation ratio of 24x forward P/E. Dive into our free research report to see why there are better opportunities than APG.
Nordson (NDSN)
Market Cap: $12.52 billion
Founded in 1954, Nordson Corporation (NASDAQ: NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.
Why Should You Dump NDSN?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share were flat over the last two years and fell short of the peer group average
- 5.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $223.68 per share, Nordson trades at 21.3x forward P/E. If you’re considering NDSN for your portfolio, see our FREE research report to learn more.
Reinsurance Group of America (RGA)
Market Cap: $12.56 billion
Operating behind the scenes of the insurance industry since 1973, Reinsurance Group of America (NYSE: RGA) provides life and health reinsurance services to insurance companies, helping them manage risk and meet regulatory requirements.
Why Are We Cautious About RGA?
- Products and services are facing profitability challenges during this cycle, as seen in its flat book value per share over the last five years
- Estimated book value per share growth of 1.4% for the next 12 months implies profitability will slow from its two-year trend
- Below-average return on equity indicates management struggled to find compelling investment opportunities
Reinsurance Group of America is trading at $189.97 per share, or 1x forward P/B. Check out our free in-depth research report to learn more about why RGA doesn’t pass our bar.
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