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.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. Keeping that in mind, here is one mid-cap stock with a long growth runway and two that could be down big.
Two Mid-Cap Stocks to Sell:
MongoDB (MDB)
Market Cap: $18.33 billion
Started in 2007 by the team behind Google’s ad platform, DoubleClick, MongoDB offers database-as-a-service that helps companies store large volumes of semi-structured data.
Why Are We Cautious About MDB?
- Operating losses show it sacrificed profitability while scaling the business
- Poor free cash flow margin of 7.6% for the last year limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
MongoDB is trading at $225 per share, or 7.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than MDB.
Viatris (VTRS)
Market Cap: $10.84 billion
Created through the 2020 merger of Mylan and Pfizer's Upjohn division, Viatris (NASDAQ:VTRS) is a healthcare company that develops, manufactures, and distributes branded and generic medicines across more than 165 countries worldwide.
Why Do We Pass on VTRS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 4.8% annually over the last two years
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 11.2% annually
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
At $9.15 per share, Viatris trades at 4x forward P/E. Read our free research report to see why you should think twice about including VTRS in your portfolio.
One Mid-Cap Stock to Buy:
Erie Indemnity (ERIE)
Market Cap: $19.04 billion
Operating under a unique business model dating back to 1925, Erie Indemnity (NASDAQ:ERIE) serves as the attorney-in-fact for Erie Insurance Exchange, managing policy issuance, claims handling, and investment services for this reciprocal insurer.
Why Are We Backing ERIE?
- Annual revenue growth of 15.6% over the last two years was superb and indicates its market share increased during this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 34.9% outpaced its revenue gains
- Industry-leading 26.8% return on equity demonstrates management’s skill in finding high-return investments
Erie Indemnity’s stock price of $369.97 implies a valuation ratio of 4.9x trailing 12-month price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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