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.
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 two mid-cap stocks with huge upside potential and one that could be down big.
One Mid-Cap Stock to Sell:
Warner Bros. Discovery (WBD)
Market Cap: $22.44 billion
Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ: WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.
Why Do We Think WBD Will Underperform?
- Products and services have few die-hard fans as sales have declined by 4.9% annually over the last two years
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 16.9% annually
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $9.01 per share, Warner Bros. Discovery trades at 164.6x forward P/E. Dive into our free research report to see why there are better opportunities than WBD.
Two Mid-Cap Stocks to Watch:
The Trade Desk (TTD)
Market Cap: $34.91 billion
Founded by former Microsoft engineers Jeff Green and Dave Pickles, The Trade Desk (NASDAQ: TTD) offers cloud-based software that uses data to help advertisers better plan, place, and target their online ads.
Why Should You Buy TTD?
- Billings growth has averaged 25.9% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Excellent operating margin of 17.6% highlights the efficiency of its business model, and its profits increased over the last year as it scaled
The Trade Desk is trading at $70.98 per share, or 12.1x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Paycom (PAYC)
Market Cap: $14.16 billion
Founded in 1998 as one of the first online payroll companies, Paycom (NYSE: PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Why Does PAYC Stand Out?
- Software is difficult to replicate at scale and leads to a best-in-class gross margin of 85.9%
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
- Disciplined cost controls and effective management resulted in a strong trailing 12-month operating margin of 27.9%
Paycom’s stock price of $254.79 implies a valuation ratio of 6.8x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 5 Strong Momentum Stocks for this week. 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
