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. Keeping that in mind, here are two mid-cap stocks with long growth runways and one best left ignored.
One Mid-Cap Stock to Sell:
Cincinnati Financial (CINF)
Market Cap: $26.41 billion
Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ:CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.
Why Are We Cautious About CINF?
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Day-to-day expenses have swelled relative to revenue over the last five years as its pre-tax profit margin fell by 16.2 percentage points
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Earnings growth underperformed the sector average over the last two years as its EPS grew by just 18.4% annually
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Estimated book value per share growth of 4.8% for the next 12 months implies profitability will slow from its two-year trend
Cincinnati Financial is trading at $170.67 per share, or 1.5x forward P/B. To fully understand why you should be careful with CINF, check out our full research report (it’s free).
Two Mid-Cap Stocks to Watch:
HubSpot (HUBS)
Market Cap: $12.5 billion
Born from the idea that traditional interruptive marketing was becoming less effective, HubSpot (NYSE:HUBS) provides an integrated platform that helps businesses attract, engage, and manage customer relationships through marketing, sales, service, and content management tools.
Why Are We Positive on HUBS?
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Impressive 20% annual revenue growth over the last two years indicates it’s winning market share
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Customers view its software as mission-critical to their operations as its ARR has averaged 21.3% growth over the last year
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Prominent and differentiated software results in a premier gross margin of 83.2%
At $249.88 per share, HubSpot trades at 3x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Applied Industrial (AIT)
Market Cap: $12.14 billion
Formerly called The Ohio Ball Bearing Company, Applied Industrial (NYSE:AIT) distributes industrial products–everything from power tools to industrial valves–and services to a wide variety of industries.
