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 is one mid-cap stock with huge upside potential and two that could be down big.
Two Mid-Cap Stocks to Sell:
Amkor (AMKR)
Market Cap: $12.36 billion
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ: AMKR) provides outsourced packaging and testing for semiconductors.
Why Does AMKR Worry Us?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Gross margin of 14.2% reflects its high production costs
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Amkor’s stock price of $49.93 implies a valuation ratio of 32.2x forward P/E. If you’re considering AMKR for your portfolio, see our FREE research report to learn more.
Genuine Parts (GPC)
Market Cap: $19.32 billion
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Are We Cautious About GPC?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4% for the last three years
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new shoppers into its brick-and-mortar locations
- Capital intensity has ramped up over the last year as its free cash flow margin decreased by 3.3 percentage points
Genuine Parts is trading at $138.38 per share, or 17x forward P/E. Read our free research report to see why you should think twice about including GPC in your portfolio.
One Mid-Cap Stock to Watch:
ITT (ITT)
Market Cap: $15.89 billion
Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE: ITT) provides motion and fluid handling equipment for various industries
Why Does ITT Stand Out?
- Excellent operating margin of 17.5% highlights the efficiency of its business model
- Free cash flow margin grew by 17.4 percentage points over the last five years, giving the company more chips to play with
- ROIC punches in at 20.4%, illustrating management’s expertise in identifying profitable investments
At $184.74 per share, ITT trades at 25.3x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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