1 Mid-Cap Stock Worth Investigating and 2 We Ignore

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.

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 is one mid-cap stock with massive growth potential and two best left ignored.

Market Cap: $11.17 billion

Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.

Why Do We Avoid SJM?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion

2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 27.1 percentage points

3. ROIC of 2.2% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

J. M. Smucker’s stock price of $103.76 implies a valuation ratio of 11x forward P/E. Check out our free in-depth research report to learn more about why SJM doesn’t pass our bar.

Market Cap: $21 billion

Born from the legendary Silicon Valley garage startup founded by Bill Hewlett and Dave Packard in 1939, HP (NYSE:HPQ) designs and sells personal computers, printers, and related technology products and services to consumers, businesses, and enterprises worldwide.

Why Do We Think HPQ Will Underperform?

1. Sales stagnated over the last five years and signal the need for new growth strategies

2. Estimated sales growth of 2.3% for the next 12 months is soft and implies weaker demand

3. Earnings per share fell by 2% annually over the last two years while its revenue was flat, showing each sale was less profitable

HP is trading at $22.58 per share, or 6.8x forward P/E. Dive into our free research report to see why there are better opportunities than HPQ.

Market Cap: $19.34 billion

Formerly known as FLEETCOR until its 2024 rebrand, Corpay (NYSE:CPAY) provides specialized payment solutions for businesses to manage vehicle expenses, corporate payments, and lodging costs with enhanced control and reporting capabilities.

Why Does CPAY Stand Out?

1. Offerings and unique value proposition resonate with customers, as seen in its above-market 11.8% annual sales growth over the last five years

2. Share buybacks lifted its annual earnings per share growth to 13%, which outperformed its revenue gains over the last five years

3. Stellar return on equity showcases management’s ability to surface highly profitable business ventures