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 are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
Chewy (CHWY)
Market Cap: $16.08 billion
Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Why Does CHWY Give Us Pause?
- Annual sales growth of 9.3% over the last three years lagged behind its consumer internet peers as its large revenue base made it difficult to generate incremental demand
- Estimated sales growth of 5.1% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 29% reflects its high servicing costs
Chewy’s stock price of $38.97 implies a valuation ratio of 22.1x forward EV/EBITDA. Check out our free in-depth research report to learn more about why CHWY doesn’t pass our bar.
Williams-Sonoma (WSM)
Market Cap: $25.27 billion
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE: WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.
Why Does WSM Worry Us?
- Recent store closures and weak same-store sales point to soft demand and an operational restructuring
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- 5.3 percentage point decline in its free cash flow margin over the last year reflects the company’s increased investments to defend its market position
At $206.19 per share, Williams-Sonoma trades at 24.1x forward P/E. Read our free research report to see why you should think twice about including WSM in your portfolio.
M&T Bank (MTB)
Market Cap: $30.31 billion
Tracing its roots back to 1856 when it was founded as Manufacturers and Traders Bank in Buffalo, New York, M&T Bank (NYSE: MTB) is a regional bank holding company that provides retail and commercial banking, trust, wealth management, and investment services to consumers and businesses.
Why Are We Wary of MTB?
- Sales tumbled by 1.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Estimated net interest income growth of 5.5% for the next 12 months implies demand will slow from its five-year trend
- Net interest margin shrank by 24.3 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
M&T Bank is trading at $193.95 per share, or 1.1x forward P/B. Check out our free in-depth research report to learn more about why MTB doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
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