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. That said, here are three mid-cap stocks to avoid and some other investments you should consider instead.
DraftKings (DKNG)
Market Cap: $14.9 billion
Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.
Why Do We Think Twice About DKNG?
- Number of monthly unique players has disappointed over the past two years, indicating weak demand for its offerings
- Poor expense management has led to operating margin losses
- Free cash flow margin is projected to show no improvement next year
DraftKings is trading at $29.73 per share, or 28.8x forward P/E. To fully understand why you should be careful with DKNG, check out our full research report (it’s free).
FactSet (FDS)
Market Cap: $9.38 billion
Founded in 1978 when financial data was still primarily delivered through paper reports, FactSet (NYSE: FDS) provides financial data, analytics, and technology solutions that investment professionals use to research, analyze, and manage their portfolios.
Why Does FDS Worry Us?
- Muted 5.5% annual revenue growth over the last two years shows its demand lagged behind its financials peers
- Earnings per share lagged its peers over the last two years as they only grew by 8.1% annually
FactSet’s stock price of $253.40 implies a valuation ratio of 15.1x forward P/E. Read our free research report to see why you should think twice about including FDS in your portfolio.
Pinnacle Financial Partners (PNFP)
Market Cap: $14.3 billion
Founded in 2000 with a focus on delivering big-bank capabilities with community bank personalization, Pinnacle Financial Partners (NASDAQ: PNFP) is a Tennessee-based financial holding company that provides banking, investment, trust, mortgage, and insurance services to businesses and individuals.
Why Is PNFP Not Exciting?
- Net interest margin of 3.2% is well below other banks, signaling its loans aren’t very profitable
- Operational productivity has decreased over the last four years as its efficiency ratio worsened by 7 percentage points
- Estimated tangible book value per share growth of 3% for the next 12 months implies profitability will slow from its two-year trend
At $94.97 per share, Pinnacle Financial Partners trades at 0.9x forward P/B. Check out our free in-depth research report to learn more about why PNFP doesn’t pass our bar.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
