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 is one mid-cap stock with a long growth runway and two best left ignored.
Two Mid-Cap Stocks to Sell:
Dollar General (DG)
Market Cap: $21.72 billion
Appealing to the budget-conscious consumer, Dollar General (NYSE: DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.
Why Do We Think Twice About DG?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Gross margin of 29.9% is below its competitors, leaving less money for marketing and promotions
- 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Dollar General is trading at $98.60 per share, or 15.4x forward P/E. To fully understand why you should be careful with DG, check out our full research report (it’s free for active Edge members).
Somnigroup (SGI)
Market Cap: $16.65 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 10.1% annual growth was below the typical consumer discretionary company
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Eroding returns on capital suggest its historical profit centers are aging
At $79.34 per share, Somnigroup trades at 28.1x forward P/E. If you’re considering SGI for your portfolio, see our FREE research report to learn more.
One Mid-Cap Stock to Buy:
Medpace (MEDP)
Market Cap: $16.48 billion
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ: MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Why Should You Buy MEDP?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 15.1% over the past two years
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 34.2% exceeded its revenue gains over the last five years
- ROIC punches in at 47.9%, illustrating management’s expertise in identifying profitable investments
Medpace’s stock price of $584.91 implies a valuation ratio of 37x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
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 183% over the last five years (as of March 31st 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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