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.
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 massive growth potential and two best left ignored.
Two Mid-Cap Stocks to Sell:
BJ's (BJ)
Market Cap: $12.61 billion
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE: BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
Why Does BJ Give Us Pause?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.5% that must be offset through higher volumes
- Operating margin of 3.9% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
At $96.15 per share, BJ's trades at 21.7x forward P/E. If you’re considering BJ for your portfolio, see our FREE research report to learn more.
Assurant (AIZ)
Market Cap: $11.15 billion
With roots dating back to 1892 when it was founded by a Civil War veteran, Assurant (NYSE: AIZ) provides specialized insurance products and services that protect major consumer purchases like mobile devices, vehicles, homes, and appliances.
Why Are We Wary of AIZ?
- Outsized scale creates growth headwinds as its 4.8% annualized net premiums earned increases over the last five years underperformed other financial institutions
- Earnings per share lagged its peers over the last two years as they only grew by 13.1% annually
- Annual book value per share growth of 2.8% over the last five years lagged behind its insurance peers as its large balance sheet made it difficult to generate incremental capital growth
Assurant is trading at $224.12 per share, or 1.7x forward P/B. Read our free research report to see why you should think twice about including AIZ in your portfolio.
One Mid-Cap Stock to Buy:
LPL Financial (LPLA)
Market Cap: $25.56 billion
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ: LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
Why Is LPLA a Top Pick?
- Annual revenue growth of 30% over the past two years was outstanding, reflecting market share gains this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 25.5% outpaced its revenue gains
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
LPL Financial’s stock price of $319.31 implies a valuation ratio of 13.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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