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 could be down big.
Two Mid-Cap Stocks to Sell:
Hormel Foods (HRL)
Market Cap: $12.49 billion
Best known for its SPAM brand, Hormel (NYSE: HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.
Why Do We Steer Clear of HRL?
- Falling unit sales over the past two years suggest it might have to lower prices to stimulate growth
- Gross margin of 16.2% is below its competitors, leaving less money to invest in areas like marketing and production facilities
- Earnings per share fell by 8.8% annually over the last three years while its revenue was flat, showing each sale was less profitable
Hormel Foods’s stock price of $22.71 implies a valuation ratio of 14.9x forward P/E. Dive into our free research report to see why there are better opportunities than HRL.
Exact Sciences (EXAS)
Market Cap: $19.82 billion
With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ: EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.
Why Are We Wary of EXAS?
- Cash-burning history makes us doubt the long-term viability of its business model
- Push for growth has led to negative returns on capital, signaling value destruction
At $103.31 per share, Exact Sciences trades at 90.9x forward P/E. Check out our free in-depth research report to learn more about why EXAS doesn’t pass our bar.
One Mid-Cap Stock to Watch:
CACI (CACI)
Market Cap: $13.37 billion
Founded to commercialize SIMSCRIPT, CACI International (NYSE: CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.
Why Could CACI Be a Winner?
- Annual revenue growth of 12.2% over the past two years was outstanding, reflecting market share gains this cycle
- Forecasted revenue growth of 11.1% for the next 12 months indicates its momentum over the last two years is sustainable
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 22.2% exceeded its revenue gains over the last two years
CACI is trading at $601.04 per share, or 20.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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