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.
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 are two mid-cap stocks with long growth runways and one that could be down big.
One Mid-Cap Stock to Sell:
Gartner (IT)
Market Cap: $18.76 billion
With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE: IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.
Why Do We Think Twice About IT?
- Estimated sales growth of 2.9% for the next 12 months implies demand will slow from its two-year trend
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.3 percentage points
Gartner is trading at $247.73 per share, or 19.2x forward P/E. Check out our free in-depth research report to learn more about why IT doesn’t pass our bar.
Two Mid-Cap Stocks to Watch:
Toast (TOST)
Market Cap: $26.21 billion
Born from the frustrations of three friends waiting too long for their restaurant bill, Toast (NYSE: TOST) provides a cloud-based digital technology platform with software, payment processing, and hardware solutions built specifically for restaurants.
Why Do We Like TOST?
- Customers view its software as mission-critical to their operations as its ARR has averaged 30.8% growth over the last year
- Estimated revenue growth of 21% for the next 12 months implies its momentum over the last three years will continue
- Operating margin improvement of 7.2 percentage points over the last year demonstrates its ability to scale efficiently
At $44.75 per share, Toast trades at 4.1x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Comfort Systems (FIX)
Market Cap: $25.7 billion
Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.
Why Will FIX Beat the Market?
- Demand is greater than supply as the company’s 29.5% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Returns on capital are climbing as management makes more lucrative bets
Comfort Systems’s stock price of $732.51 implies a valuation ratio of 36.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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