In This Article:
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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one mid-cap stock with massive growth potential and two best left ignored.
Two Mid-Cap Stocks to Sell:
Snap (SNAP)
Market Cap: $15.21 billion
Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network.
Why Are We Wary of SNAP?
-
Decision to emphasize platform growth over monetization has contributed to sluggish trends in its average revenue per user
-
Efficiency has decreased over the last few years as its EBITDA margin fell by 5.2 percentage points
-
Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 8.9% annually
Snap’s stock price of $9.06 implies a valuation ratio of 23.7x forward EV/EBITDA. Check out our free in-depth research report to learn more about why SNAP doesn’t pass our bar.
JLL (JLL)
Market Cap: $11.38 billion
Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE:JLL) is a company specializing in real estate advisory and investment management services.
Why Do We Avoid JLL?
-
Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.7% over the last five years was below our standards for the consumer discretionary sector
-
Low free cash flow margin of 2.1% for the last two years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
-
Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam
JLL is trading at $239.62 per share, or 14.4x forward P/E. Read our free research report to see why you should think twice about including JLL in your portfolio, it’s free.
One Mid-Cap Stock to Watch:
Broadridge (BR)
Market Cap: $27.88 billion
Processing over $10 trillion in equity and fixed income trades daily and managing proxy voting for over 800 million equity positions, Broadridge Financial Solutions (NYSE:BR) provides technology-driven solutions that power investing, governance, and communications for banks, broker-dealers, asset managers, and public companies.