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. That said, here is one mid-cap stock with a long growth runway and two that may have trouble.

Two Mid-Cap Stocks to Sell:

Guidewire (GWRE)

Market Cap: $19.82 billion

Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE: GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.

Why Does GWRE Give Us Pause?

1. Annual revenue growth of 12.6% over the last three years was below our standards for the software sector
2. High servicing costs result in a relatively inferior gross margin of 61.9% that must be offset through increased usage

At $235.40 per share, Guidewire trades at 15.5x forward price-to-sales. If you’re considering GWRE for your portfolio, see our FREE research report to learn more.

Rocket Lab (RKLB)

Market Cap: $16.33 billion

Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.

Why Does RKLB Fall Short?

1. Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
2. Negative free cash flow raises questions about the return timeline for its investments
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Rocket Lab’s stock price of $35.23 implies a valuation ratio of 28.4x forward price-to-sales. To fully understand why you should be careful with RKLB, check out our full research report (it’s free).

One Mid-Cap Stock to Buy:

Lululemon (LULU)

Market Cap: $28.17 billion

Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.

Why Is LULU a Top Pick?

1. Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.6% growth over the past two years
2. Unique assortment of products and pricing power are reflected in its best-in-class gross margin of 58.9%
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Lululemon is trading at $235.10 per share, or 15.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 183% over the last five years (as of March 31st 2025).

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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today