3 Mid-Cap Stocks Walking a Fine Line

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.

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.

VeriSign (VRSN)

Market Cap: $22.5 billion

While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.

Why Are We Hesitant About VRSN?

1. Annual revenue growth of 5.5% over the last three years was well below our standards for the software sector
2. Products, pricing, or go-to-market strategy may need some adjustments as its 9.9% average billings growth over the last year was weak
3. Estimated sales growth of 3.3% for the next 12 months implies demand will slow from its three-year trend

VeriSign is trading at $239.08 per share, or 14.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than VRSN.

IDEX (IEX)

Market Cap: $14.73 billion

Founded in 1988, IDEX (NYSE:IEX) is a global manufacturer specializing in highly engineered products such as pumps, flow meters, and fluidics systems for various industries.

Why Are We Out on IEX?

1. 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
2. Earnings per share fell by 1.5% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

IDEX’s stock price of $195.98 implies a valuation ratio of 22.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why IEX doesn’t pass our bar.

Avery Dennison (AVY)

Market Cap: $14.85 billion

Founded as Kum Kleen Products, Avery Dennison (NYSE:AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.

Why Should You Dump AVY?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Earnings per share lagged its peers over the last two years as they only grew by 1.4% annually
3. Waning returns on capital imply its previous profit engines are losing steam

At $188.11 per share, Avery Dennison trades at 17.7x forward price-to-earnings. Read our free research report to see why you should think twice about including AVY in your portfolio.

Stocks We Like More

The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.

Get started by checking out our Top 5 Growth Stocks for this month. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.