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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three mid-cap stocks to avoid and some other investments you should consider instead.
Saia (SAIA)
Market Cap: $10.75 billion
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.
Why Are We Cautious About SAIA?
- Disappointing tons shipped over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Investment activity picked up over the last five years, pressuring its weak free cash flow margin of -0.4%
- Diminishing returns on capital suggest its earlier profit pools are drying up
Saia is trading at $404.03 per share, or 36.2x forward P/E. Check out our free in-depth research report to learn more about why SAIA doesn’t pass our bar.
Toll Brothers (TOL)
Market Cap: $15.03 billion
Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE: TOL) is a luxury homebuilder across the United States.
Why Do We Think Twice About TOL?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 9.4% decline in its backlog
- Estimated sales decline of 6.6% for the next 12 months implies a challenging demand environment
- Earnings per share lagged its peers over the last two years as they only grew by 3.6% annually
At $156.82 per share, Toll Brothers trades at 12.5x forward P/E. To fully understand why you should be careful with TOL, check out our full research report (it’s free).
Affirm (AFRM)
Market Cap: $16.8 billion
Founded by PayPal co-founder Max Levchin with a mission to create honest financial products, Affirm (NASDAQ: AFRM) provides a payment network that allows consumers to make purchases and pay for them over time with transparent, flexible installment loans.
Why Are We Wary of AFRM?
- Negative return on equity shows that some of its growth strategies have backfired
- High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Affirm’s stock price of $49.51 implies a valuation ratio of 13.5x forward P/E. If you’re considering AFRM for your portfolio, see our FREE research report to learn more.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
