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 are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
DocuSign (DOCU)
Market Cap: $16.61 billion
Founded by Seattle-based entrepreneur Tom Gonser, DocuSign (NASDAQ:DOCU) is the pioneer of e-signature and offers software as a service that allows people and organisations to sign legally binding documents electronically.
Why Are We Wary of DOCU?
- Average billings growth of 6.6% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Net revenue retention rate of 99.8% shows it has a tough time retaining customers
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
DocuSign’s stock price of $81.76 implies a valuation ratio of 5.6x forward price-to-sales. Read our free research report to see why you should think twice about including DOCU in your portfolio.
J. M. Smucker (SJM)
Market Cap: $12.13 billion
Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
Why Are We Hesitant About SJM?
- Lackluster 3.7% annual revenue growth over the last three years indicates the company is losing ground to competitors
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging
J. M. Smucker is trading at $113.53 per share, or 11.2x forward price-to-earnings. If you’re considering SJM for your portfolio, see our FREE research report to learn more.
Quest (DGX)
Market Cap: $19.72 billion
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE:DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Why Does DGX Worry Us?
- Weak requisition volumes over the past two years indicate demand is soft and that the company may need to revise its strategy
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 10.3 percentage points
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $176.75 per share, Quest trades at 18x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than DGX.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.