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. Keeping that in mind, here are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
Oshkosh (OSK)
Market Cap: $10.78 billion
Oshkosh (NYSE: OSK) manufactures specialty vehicles for the defense, fire, emergency, and commercial industry, operating various brand subsidiaries within each industry.
Why Are We Hesitant About OSK?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 5.7% decline in its backlog
- Gross margin of 16.5% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.5% annually
At $172.39 per share, Oshkosh trades at 15.7x forward P/E. Read our free research report to see why you should think twice about including OSK in your portfolio.
Centene (CNC)
Market Cap: $20.99 billion
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE: CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Why Does CNC Fall Short?
- Customer growth was choppy over the past two years, suggesting that increasing competition is causing challenges in landing new contracts
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 16.3% annually while its revenue grew
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Centene’s stock price of $42.78 implies a valuation ratio of 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than CNC.
West Pharmaceutical Services (WST)
Market Cap: $17.85 billion
Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE: WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.
Why Does WST Give Us Pause?
- Muted 2.1% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 6.7 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
West Pharmaceutical Services is trading at $247.92 per share, or 30.7x forward P/E. If you’re considering WST for your portfolio, see our FREE research report to learn more.
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