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.
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 may have trouble.
Two Mid-Cap Stocks to Sell:
Church & Dwight (CHD)
Market Cap: $20.99 billion
Best known for its Arm & Hammer baking soda, Church & Dwight (NYSE: CHD) is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.
Why Do We Think Twice About CHD?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Anticipated sales growth of 3.5% for the next year implies demand will be shaky
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.7 percentage points
Church & Dwight’s stock price of $86.27 implies a valuation ratio of 24x forward P/E. If you’re considering CHD for your portfolio, see our FREE research report to learn more.
AECOM (ACM)
Market Cap: $17.2 billion
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE: ACM) provides various infrastructure consulting services.
Why Are We Cautious About ACM?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 2% declines over the past two years
- Gross margin of 6.6% reflects its high production costs
- Poor expense management has led to an operating margin of 4.5% that is below the industry average
AECOM is trading at $130.27 per share, or 24.1x forward P/E. Dive into our free research report to see why there are better opportunities than ACM.
One Mid-Cap Stock to Buy:
Pure Storage (PSTG)
Market Cap: $27.25 billion
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE: PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Is PSTG a Good Business?
- ARR growth averaged 22.4% over the past two years, showing customers are willing to take multi-year bets on its offerings
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 33.1% annually, topping its revenue gains
- Strong free cash flow margin of 17.4% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
At $83.49 per share, Pure Storage trades at 40.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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