1 mid-cap stock for long-term investors and 2 we find risky

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 is one mid-cap stock with a long growth runway and two that may have trouble.

Two mid-cap stocks to sell:

Wintrust Financial (WTFC)

Market cap: $10.4 billion

Founded in 1991 as a community-focused alternative to big banks in the Chicago area, Wintrust Financial (NASDAQGS:WTFC) operates community banks in the Chicago area and provides specialty finance services including insurance premium financing and wealth management.

Why Are We Wary of WTFC?

1. Net interest margin grew by 1.3 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more chips to play with

2. Capital trends were unexciting over the last two years as its 7.6% annual tangible book value per share growth was below the typical banking firm

At $154.18 per share, Wintrust Financial trades at 1.4x forward P/B. Dive into our free research report to see why there are better opportunities than WTFC.

KeyCorp (KEY)

Market cap: $22.74 billion

Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE:KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states.

Why Are We Cautious About KEY?

1. 4.2% annual net interest income growth over the last five years was slower than its banking peers

2. Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 6.7% annually

3. Tangible book value per share tumbled by 2.2% annually over the last five years, showing banking sector trends are working against it during this cycle

KeyCorp’s stock price of $21.25 implies a valuation ratio of 1.4x forward P/B. Check out our free in-depth research report to learn more about why KEY doesn’t pass our bar.

One mid-cap stock to buy:

Ulta (ULTA)

Market cap: $27.72 billion

Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ:ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.

Why Should You Buy ULTA?

1. Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance

2. Comparable store sales rose by 4.1% on average over the past two years, demonstrating its ability to drive increased spending at existing locations

3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures