Mid-cap stocks have the best odds of scaling into $100 billion corporations thanks to their tested business models and large addressable markets. But the many opportunities in front of them attract significant competition, spanning from industry behemoths with seemingly infinite resources to small, nimble players with chips on their shoulders.
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.
Akamai Technologies (AKAM)
Market Cap: $10.99 billion
With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies (NASDAQ: AKAM) provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.
Why Should You Sell AKAM?
- Sales trends were unexciting over the last two years as its 5.6% annual growth was well below the typical software company
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 59.1%, one of the worst among software companies
- Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low
Akamai Technologies’s stock price of $76.92 implies a valuation ratio of 2.6x forward price-to-sales. To fully understand why you should be careful with AKAM, check out our full research report (it’s free).
Darden (DRI)
Market Cap: $21.59 billion
Founded in 1968 as Red Lobster, Darden (NYSE: DRI) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Why Does DRI Fall Short?
- 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 6.3% for the last six years
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Challenging supply chain dynamics and bad unit economics are reflected in its low gross margin of 21.6%
At $185.16 per share, Darden trades at 17x forward P/E. If you’re considering DRI for your portfolio, see our FREE research report to learn more.
Cincinnati Financial (CINF)
Market Cap: $24.19 billion
Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ: CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.
Why Are We Cautious About CINF?
- 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 6.8% for the last five years
- Day-to-day expenses have swelled relative to revenue over the last four years as its combined ratio increased by 8.4 percentage points
- Estimated book value per share growth of 2.8% for the next 12 months implies profitability will slow from its two-year trend
Cincinnati Financial is trading at $154.69 per share, or 1.7x forward P/B. Read our free research report to see why you should think twice about including CINF in your portfolio.
High-Quality Stocks for All Market Conditions
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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-micro-cap company Kadant (+351% 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
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