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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
Snap (SNAP)
Market Cap: $14.2 billion
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Why Are We Cautious About SNAP?
- Preference for prioritizing user growth over monetization has led to 2.5% annual drops in its average revenue per user
- Costs have risen faster than its revenue over the last few years, causing its EBITDA margin to decline by 5.5 percentage points
- Earnings per share fell by 14.7% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable
Snap is trading at $8.52 per share, or 19.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including SNAP in your portfolio.
U-Haul (UHAL)
Market Cap: $11.27 billion
Founded by a husband and wife duo, U-Haul (NYSE:UHAL) is a provider of rental trucks and storage facilities.
Why Is UHAL Risky?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- 38.3 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
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
U-Haul’s stock price of $62.22 implies a valuation ratio of 2.1x trailing 12-month price-to-sales. Dive into our free research report to see why there are better opportunities than UHAL.
XPO (XPO)
Market Cap: $12.44 billion
Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE:XPO) is a transportation company specializing in expedited shipping services.
Why Do We Think XPO Will Underperform?
- Sales tumbled by 13.5% annually over the last five years, showing market trends are working against its favor during this cycle
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Free cash flow margin dropped by 5.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $107.69 per share, XPO trades at 25.5x forward price-to-earnings. Read our free research report to see why you should think twice about including XPO in your portfolio.
Stocks We Like More
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.
Take advantage of the rebound by checking out 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.