Mid-cap stocks present a particularly compelling story at a time like this, when the trajectory of the market is difficult to decipher. In other words, sometimes it's best to stay in the middle lane.
Yes, large capitalization companies are (generally speaking) the most stable. That could be beneficial for conservative investors. But for those looking for growth, the predictable nature of large-cap stocks hinders upside.
Of course, you can always invest in small-cap stocks to increase your returns. However, because it is highly unpredictable, the risk of volatility is very high.
On the other hand, medium-sized companies have a good balance between stability and growth. Here are some mid-cap stocks to keep an eye on.
Valvoline (VVV)
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At first glance, Valvoline (New York Stock Exchange:VVV) seems like a very boring investment, if not completely corny. According to its published profile, the company is engaged in operating and franchising vehicle service centers and retail stores. I go there for quick oil change service. It doesn't necessarily scream doable.
However, VVV could make a case for buying a sleeper mid-cap stock. Despite the rise in energy prices, shares of publicly traded electric vehicle manufacturers did not fare as well. This suggests that the consumer economy is not strong enough to encourage people to switch to EVs. If so, the market for Valvoline could be larger than expected.
Admittedly, the company's results last year weren't all that great. However, for the current fiscal year, experts predict significant growth in terms of revenue. Additionally, his sales are expected to be $1.63 billion, an increase of 13.2% from last year's $1.44 billion.
To me, VVV is very attractive for the fundamental reason that demand for EVs is low. This is one of the mid-cap stocks worth keeping an eye on.
Semtech (SMTC)
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Listed under Technology Ecosystem, semtech (NASDAQ:SMTC) specializes in semiconductors. Specifically, we design, develop, manufacture and sell analog and mixed-signal products and advanced algorithms. It has critical relevance for a variety of infrastructure and industrial applications, including data centers, enterprise networks, and passive optical networks.
In my opinion, Semtech has the potential to piggyback on other innovations such as artificial intelligence. As the demand for AI increases, so will the data center ecosystem. After that, tailwinds should push SMTC stock higher. It's worth noting that analysts unanimously rate the stock as a strong buy, with an average price target of $38.31.
Last fiscal year, Semtech issued notes in the fourth quarter and posted a loss of 6 cents per share, compared to an expected loss of 3 cents. However, the average quarterly surprise over the last year was 147.6%, suggesting resilience.
For the current fiscal year, analysts believe growth will remain modest. However, next fiscal year's revenue could jump to $1.03 billion, well above the $868.76 million in fiscal 2023. Given its relevance, it's one of the mid-cap stocks to consider.
Arch Resources (ARCH)
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Although it falls under the basic materials industry, arch resources (New York Stock Exchange:arch) I work exclusively in coking coal. Specifically, we manufacture and sell metallurgical products. He operates in two departments: Metallurgical Department and Thermal Department. The industry faces political threats, but the tense nature of this year's election cycle means that no candidate will likely be able to take a tough stance on any particular industry.
After all, every occupational category has voters. Furthermore, as demand for electricity increases explosively due to faster data center speeds, there is a possibility that the United States will run into a power shortage. So while Arch Resources may seem like an anachronistic idea, it could be one of the mid-cap stocks to buy.
In full disclosure, last year's results were a mess. Overall, the average quarterly surprise was 9.3% below expectations. In fact, the only hit occurred in Q3. And, quite frankly, the analyst predicts that both sales and profit growth will slow in 2024.
However, they also predict a Strong Buy with a price target of $182. This may be due to the power crisis mentioned above and the tense political situation.
Required utilities (WTRG)
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working in regulated waters; essential utilities (New York Stock Exchange:WTRG), through its subsidiaries, operates regulated utilities that provide water, wastewater, or natural gas services in the United States. What I appreciate about major power companies is that they are natural monopolies. Companies looking to compete face many steep obstacles, not the least of which are regulatory hurdles. So, in effect, companies like Essential are here to stay.
It's like a bully. If you can't beat them, join them. Unsurprisingly, the analyst is enthusiastic about WTRG stock. In fact, they unanimously rate the stock a Strong Buy, with an average price target of $41.50. And while fiscal 2023 results weren't all that exciting, average expected earnings beat expectations by 0.7%.
For the current fiscal year, analysts expect earnings of $1.98 per share and revenue of $2.36 billion. This is a notable improvement over last year's performance, when the company posted profits of $1.86 on sales of $2.05 billion. In my opinion, this is an easy buy case for mid-cap stocks.
Wix (WIX)
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Active in the field of technology, wicks (NASDAQ:wicks) Technically falls under the infrastructure software domain. According to his public profile, Wix operates as his cloud-based web development platform for registered users and creators around the world. By looking up the word salad, the company provides an intuitive canvas on which to build his website. It works through a graphical user interface, which makes it very convenient.
Analysts also appreciate the idea. 17 out of 18 experts rated his WIX a Buy. Additionally, the average price target is $157.29, suggesting decent growth. Fundamentally, Wix should benefit from the rise of the gig economy. Additionally, despite increased layoffs in certain sectors, many workers may choose to become independent contractors, thereby increasing the overall addressable market for companies. There is a possibility.
Financial results are positive. Over the past fiscal year, Wix's average positive earnings surprise was 188.15%. For the current fiscal year, analysts expect EPS of $4.84 and revenue of $1.75 billion. These stats represent a notable improvement over last year's EPS of $4.39 on revenue of $1.56 billion. Mid-cap stocks are easy to buy.
Six Flags (SIX)
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Listed in a wide range of consumer cyclical industries, six flags (New York Stock Exchange:Six) represents one of the most popular theme parks and water parks. The post-pandemic cycle will be difficult for SIX stock, but it's typically a solid investment. As proof of that, over the past five years the stock has declined by nearly 52% of its stock value. Still, it could be a mid-cap idea for speculators to consider.
That's because people are still interested in travel and “experiential” services. According to Deloitte, the phenomenon of revenge tourism is on the decline. But according to the report, a new era of prioritizing travel may be upon us. If so, SIX is worth your attention. Analysts have done just that, with an average price target of $29.63 and a consensus view of the stock as a strong buy.
If Deloitte's research is true, SIX could be a surprising idea for mid-cap stocks. Yes, I struggled most of last year. However, experts expect EPS to hit $1.79 this quarter, a significant improvement over last year's 46 cents. Additionally, sales could reach $1.51 billion, an increase of 5.6%.
Marriott Vacations (VAC)
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Perhaps the riskiest idea on this mid-cap list is Marriott Travel Guide (New York Stock Exchange:VAC) also fall under the broader consumption circulation space. According to its company profile, Marriott develops, markets, sells and manages vacation ownership and related businesses, products and services in the United States and internationally. If people, especially wealthy consumers, are prioritizing travel, VAC stock should be on their radar.
To be fair, Marriott Vacations has been hit or miss over the last year. The best performance occurred in Q1 2023, with EPS of $2.54, beating the consensus target by nearly 31%. However, the worst performance was in Q3, when EPS was $1.20, a 44.4% decrease compared to the consensus view. Analysts have since given the stock a moderate buy, with a price target of $109.57.
However, the most optimistic price target is $159, which means there is nearly 58% upside potential. To reach that point, we need to recover the vacation home space. Analysts predict sales for the current fiscal year will reach $4.8 billion, an increase of 51.7% from $3.17 billion a year ago.
Publication date, Josh Enomoto did not have any positions (directly or indirectly) in any securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
