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.

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 are three mid-cap stocks to avoid and some other investments you should consider instead.

Brown-Forman (BF.B)

Market Cap: $12.95 billion

Best known for its Jack Daniel’s whiskey, Brown-Forman (NYSE:BF.B) is an alcoholic beverage company with a broad portfolio of brands in wines and spirits.

Why Are We Cautious About BF.B?

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. Projected sales decline of 2.9% for the next 12 months points to an even tougher demand environment ahead

3. Day-to-day expenses have swelled relative to revenue over the last year as its operating margin fell by 6 percentage points

At $27.20 per share, Brown-Forman trades at 14.1x forward P/E. To fully understand why you should be careful with BF.B, check out our full research report (it’s free).

Universal Health Services (UHS)

Market Cap: $11.19 billion

With a network spanning 39 states and three countries, Universal Health Services (NYSE:UHS) operates acute care hospitals and behavioral health facilities across the United States, United Kingdom, and Puerto Rico.

Why Does UHS Worry Us?

1. Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 7.1% for the last five years

2. Lagging comparable store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand

3. Free cash flow margin dropped by 3.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Universal Health Services’s stock price of $172.82 implies a valuation ratio of 8.8x forward P/E. Read our free research report to see why you should think twice about including UHS in your portfolio, it’s free.

Mettler-Toledo (MTD)

Market Cap: $24.69 billion

With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE:MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.