Yahoo Finance

Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.

This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here is one mid-cap stock with huge upside potential and two that may have trouble.

Two Mid-Cap Stocks to Sell:

Zoom (ZM)

Market Cap: $23.21 billion

Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ:ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.

Why Are We Wary of ZM?

1. Average ARR growth of 3.1% over the last year has disappointed, suggesting it’s had a hard time winning long-term deals and renewals

2. Estimated sales growth of 2.7% for the next 12 months implies demand will slow from its three-year trend

3. Projected 5.1 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position

At $75.49 per share, Zoom trades at 5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ZM.

Conagra (CAG)

Market Cap: $12.36 billion

Founded in 1919 as Nebraska Consolidated Mills in Omaha, Nebraska, Conagra Brands today (NYSE:CAG) boasts a diverse portfolio of packaged foods brands that includes everything from whipped cream to jarred pickles to frozen meals.

Why Do We Steer Clear of CAG?

1. Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy

2. Projected sales decline of 1.4% for the next 12 months points to a tough demand environment ahead

3. Efficiency has decreased over the last year as its operating margin fell by 6.2 percentage points

Conagra’s stock price of $25.95 implies a valuation ratio of 9.8x forward price-to-earnings. Read our free research report to see why you should think twice about including CAG in your portfolio, it’s free.

One Mid-Cap Stock to Buy:

Curtiss-Wright (CW)

Market Cap: $12.33 billion

Formed from a merger of 12 companies, Curtiss-Wright (NYSE:CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.

Why Should You Buy CW?

1. Solid 10.5% annual revenue growth over the last two years indicates its offering’s solve complex business issues

2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue

3. Free cash flow margin jumped by 6.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends