Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.
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 are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
Ingersoll Rand (IR)
Market Cap: $30.78 billion
Started with the invention of the steam drill, Ingersoll Rand (NYSE:IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.
Why Is IR Not Exciting?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales growth of 3.1% for the next 12 months implies demand will slow from its two-year trend
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $79.23 per share, Ingersoll Rand trades at 21.4x forward P/E. If you’re considering IR for your portfolio, see our FREE research report to learn more.
Packaging Corporation of America (PKG)
Market Cap: $20.06 billion
Founded in 1959, Packaging Corporation of America (NYSE: PKG) produces containerboard and corrugated packaging products as well as displays and package protection.
Why Does PKG Worry Us?
- Weak unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 5.2 percentage points
- Earnings per share lagged its peers over the last two years as they only grew by 1.3% annually
Packaging Corporation of America’s stock price of $226.87 implies a valuation ratio of 21x forward P/E. Check out our free in-depth research report to learn more about why PKG doesn’t pass our bar.
GE HealthCare (GEHC)
Market Cap: $28.08 billion
Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ:GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.
Why Are We Wary of GEHC?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.7% over the last two years was below our standards for the healthcare sector
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
GE HealthCare is trading at $61.89 per share, or 12.2x forward P/E. Read our free research report to see why you should think twice about including GEHC in your portfolio.
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