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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.
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. Keeping that in mind, here are three mid-cap stocks to swipe left on and some alternatives you should look into instead.
Campbell's (CPB)
Market Cap: $10.23 billion
With its iconic canned soup as its cornerstone product, Campbell's (NASDAQ:CPB) is a packaged food company with an illustrious portfolio of brands.
Why Do We Think Twice About CPB?
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Falling unit sales over the past two years imply it may need to invest in product improvements to get back on track
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Estimated sales growth of 1.4% for the next 12 months implies demand will slow from its three-year trend
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Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 2.9 percentage points
Campbell's is trading at $34.50 per share, or 10.7x forward P/E. Dive into our free research report to see why there are better opportunities than CPB.
APi (APG)
Market Cap: $12.67 billion
Started in 1926 as an insulation contractor, APi (NYSE:APG) provides life safety solutions and specialty services for buildings and infrastructure.
Why Does APG Worry Us?
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Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
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Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.9 percentage points
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ROIC of 3% reflects management’s challenges in identifying attractive investment opportunities
APi’s stock price of $45.77 implies a valuation ratio of 21.7x forward P/E. To fully understand why you should be careful with APG, check out our full research report (it’s free).
Hologic (HOLX)
Market Cap: $12.34 billion
As a pioneer in 3D mammography technology that has revolutionized breast cancer detection, Hologic (NASDAQ:HOLX) develops and manufactures diagnostic products, medical imaging systems, and surgical devices focused primarily on women's health and wellness.
Why Does HOLX Fall Short?
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Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
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Efficiency has decreased over the last five years as its adjusted operating margin fell by 23.2 percentage points
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Waning returns on capital imply its previous profit engines are losing steam