Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here is one mid-cap stock with huge upside potential and two that may have trouble.
Two Mid-Cap Stocks to Sell:
Zoom (ZM)
Market Cap: $23.21 billion
Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ: ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.
Why Are We Wary of ZM?
- Average ARR growth of 3.1% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals
- Estimated sales growth of 2.7% for the next 12 months implies demand will slow from its three-year trend
- Projected 5.1 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
At $75.49 per share, Zoom trades at 5x forward price-to-sales. Read our free research report to see why you should think twice about including ZM in your portfolio.
Conagra (CAG)
Market Cap: $12.36 billion
Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE: CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.
Why Do We Steer Clear of CAG?
- Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Projected sales decline of 1.4% for the next 12 months points to a tough demand environment ahead
- Efficiency has decreased over the last year as its operating margin fell by 6.2 percentage points
Conagra’s stock price of $25.95 implies a valuation ratio of 9.8x forward price-to-earnings. If you’re considering CAG for your portfolio, see our FREE research report to learn more.
One Mid-Cap Stock to Buy:
Curtiss-Wright (CW)
Market Cap: $12.33 billion
Formed from a merger of 12 companies, Curtiss-Wright (NYSE: CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.
Why Should You Buy CW?
- Solid 10.5% annual revenue growth over the last two years indicates its offering’s solve complex business issues
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin jumped by 6.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Curtiss-Wright is trading at $327.46 per share, or 27.3x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 5 Growth Stocks for this month. 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
