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 is one mid-cap stock with a long growth runway and two best left ignored.
Two Mid-Cap Stocks to Sell:
Snap-on (SNA)
Market Cap: $17.4 billion
Founded in 1920, Snap-on (NYSE: SNA) is a global provider of tools, equipment, and diagnostics for various industries such as vehicle repair, aerospace, and the military.
Why Should You Dump SNA?
- 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
- 4.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Waning returns on capital imply its previous profit engines are losing steam
At $333.59 per share, Snap-on trades at 17.4x forward P/E. Check out our free in-depth research report to learn more about why SNA doesn’t pass our bar.
First Horizon (FHN)
Market Cap: $11.43 billion
Tracing its roots back to 1864 during the Civil War era, First Horizon (NYSE: FHN) is a Tennessee-based bank holding company that provides commercial and consumer banking, wealth management, and specialty financial services across multiple states.
Why Are We Cautious About FHN?
- Sales tumbled by 6.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Estimated net interest income growth of 3.4% for the next 12 months implies demand will slow from its five-year trend
- Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 20.3 basis points (100 basis points = 1 percentage point)
First Horizon is trading at $22.70 per share, or 1.3x forward P/B. If you’re considering FHN for your portfolio, see our FREE research report to learn more.
One Mid-Cap Stock to Buy:
Kinsale Capital Group (KNSL)
Market Cap: $10.06 billion
Founded in 2009 during the aftermath of the financial crisis when many insurers were retreating from riskier markets, Kinsale Capital Group (NYSE: KNSL) is an insurance company that specializes in writing policies for hard-to-place, unusual, or high-risk businesses that standard insurers typically avoid.
Why Are We Backing KNSL?
- Net premiums earned expanded by 25.9% annually over the last two years, demonstrating exceptional market penetration this cycle
- Balance sheet strength has increased this cycle as its 40.2% annual book value per share growth over the last two years was exceptional
- Book value per share outlook for the upcoming 12 months is outstanding and shows it’s on track to build significant equity value
Kinsale Capital Group’s stock price of $431.69 implies a valuation ratio of 5.3x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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