15 Mid-Cap Stocks to Buy for Mighty Returns
Mid-cap stocks aren't exactly spotlight hogs.
Many investors buy into large companies because they tends to be more stable, plus information and media coverage are more readily available. Investors also know to buy small-cap stocks if they want to make aggressive growth investments to boost their long-term returns. But mid-caps - typically, stocks between $2 billion and $10 billion in market value - tend to get lost in the mix.
That's unfortunate, because over the long haul, they tend to outperform their larger and smaller brethren.
Between 2015 and 2019, the S&P 500 outperformed both the S&P MidCap 400 and the S&P SmallCap 600 on a total-return basis (price plus dividends). In the 10 years from 2010 and 2019, small caps flipped the script, outperforming the large- and mid-cap indices. But across the entire span, from 2005 to 2019, the MidCap 400 delivered a total return of 293% - 14 percentage points higher than the SmallCap 600, and 33 percentage points better than the S&P 500. Experts point out that outperformance looks even better once you adjust for risk.
"Large-cap stocks offer the stability that comes with mature multinational businesses with diverse revenue sources," Matthew Bartolini, head of SPDR Americas Research, writes in a 2019 note to clients. "Small-cap stocks are unproven, but they offer potential for further expansion and market penetration. And midcaps offer a unique combination of the managerial maturity associated with large caps and the operational dexterity of small caps."
With this in mind, here are 15 of the best mid-cap stocks to buy to give you upside growth potential in stronger economies, along with some downside protection when the market environment looks weaker.
Yeti Holdings
Market value: $3.2 billion
Dividend yield: N/A
Analysts' opinion: 10 Strong Buy, 2 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Yeti Holdings (YETI, $36.59) makes premium coolers, bottles and other outdoor products. It's coming off a strong 2019 in which its stock gained a whopping 134%, and it appears ready to take its place among the best mid-cap stocks in 2020.
Yeti delivered better-than-expected third-quarter results at the end of October. Sales increased by 17% year-over-year to $229.1 million, and adjusted earnings popped 29% to $26.1 million, or 30 cents per share; both figures topped analyst expectations. For the full year, Yeti is expecting sales growth of at least 14.5% and earnings growth of 23% to 26%. Looking out to 2020, analysts predict revenues and profits will improve by 13% and 20%, respectively. All of these are promising figures.
In January, KeyBanc Capital Markets analyst Brett Andress conducted store checks at eight Lowe's () locations in Florida to ascertain how well Yeti's partnership with the home improvement retailer was doing. He wrote that Yeti's products were receiving excellent product placement in high-traffic areas, and that each location was stocking approximately $36,000 in products. Andress suggests that if Yeti sold at all Lowe's stores, the company could gain an additional $30 million in annual revenues and 10 cents per share in profits by
You’re reading a preview, subscribe to read more.
Start your free 30 days