The 7 Best Mid-Cap Stocks to Buy Right Now
While the large-capitalization firms attract massive institutional support and the small enterprises grab retail eyeballs, the center lane investments – even those labeled the best mid-cap stocks to buy – tend to languish on the sidelines. However, the extraordinary events of the post-pandemic new normal brings plenty of value for this segment.
Though it’s a difficult concept to nail down, it’s possible the unique dynamics following the coronavirus disruption created a bifurcation in the market. With discounts in play, conservative investors focused on blue chips while meme traders generally targeted smaller or underappreciated enterprises. Relatively few sought out the best mid-cap stocks to buy.
However, this circumstance opens the door for astute investors seeking smart, under-the-radar market ideas. Below are some of the best mid-cap stocks to buy right now.
Best Mid-Cap Stocks: West Fraser Timber (WFG)
Headquartered in Vancouver, British Columbia, West Fraser Timber (NYSE:WFG) is a Canadian forestry company that produces lumber and other specialized wood-based products such as pulp and plywood. Current, West Fraser commands a market cap of 8.77 billion CAD, translating to roughly $6.52 billion. On a year-to-date (YTD) basis, WFG has dipped 15%.
Fundamentally, what justifies inclusion of WFG among the best mid-cap stocks to buy centers on its overall financial resilience. For instance, the company enjoys a strong balance sheet. Its cash-to-debt ratio stands at 2.65 times, beating out over 78% of sector players. Additionally, its Altman Z-Score is 4.67, reflecting low bankruptcy risk.
On the income front, West Fraser features a three-year revenue growth rate of 15.2%, above 87% of the industry. As well, the company benefits from excellent profit margins across the board. In particular, its gross margin of almost 50% implies potentially robust economies of scale, thus facilitating flexibility.
Based in China, Vipshop (NYSE:VIPS) operates the e-commerce website VIP.com, which specializes in online discount sales. Per its public profile, Vipshop represents the third-largest e-commerce site in its home nation. Currently, Vipshop commands a market cap of $6.87 billion. Since the start of the year, VIPS gained 34% of equity value. In the trailing month, shares skyrocketed more than 50%.
To be fair, China-related investments suffer from a dark cloud because of the ongoing protests against the government’s zero-Covid policy. However, VIPS brings much intrigue as one of the best mid-cap stocks to buy right now. For one thing, the company enjoys a cynical benefit due to the e-commerce (product delivery) angle.
Financially, though, VIPS stock presents an attractive profile. In a nutshell, Vipshop enjoys solid growth and profitability metrics. As well, it features a stable balance sheet with a healthy cash position. Finally, the market prices VIPS at only 7.1-times forward earnings. In contrast, the sector median is 13.7 times.
Best Mid-Cap Stocks: Louisiana-Pacific (LPX)
Headquartered in Nashville, Tennessee, Louisiana-Pacific (NYSE:LPX) is an American building materials manufacturer. As such, the company offers a contrarian take on the housing market. If you believe in a future building boom, LPX could be your ticket to riches. Presently, Louisiana-Pacific carries a market cap of $4.64 billion. Shares are down 17% YTD.
Though with the latest boom in the equities sector forcing LPX down against the benchmark S&P 500 for the year, in the trailing month, LPX gained 15%. Financially, shares belong on this list of best mid-cap stocks to buy for lacking any glaring vulnerabilities. Per Gurufocus, the company features only one yellow flag and no red flags.
Of course, this leaves plenty of positives for investors to mull over. For instance, the company features a solid balance sheet, with an Altman Z-Score of 8. In addition, Louisiana-Pacific enjoys excellent revenue and profit margins. Finally, the market prices LPX at 4.2 times trailing-12-month earnings, which is extremely undervalued.
Silicon Motion Technology (SIMO)
Based out of Taiwan, Silicon Motion Technology (NASDAQ:SIMO) focuses on developing NAND flash controller integrated circuits for solid-state storage devices. At the moment, Silicon Motion features a market cap of just more than $2 billion. Since the beginning of the year, SIMO dropped almost 34% of equity value. However, in the trailing month, shares gained more than 11%.
To be sure, Silicon suffered from at least a double whammy (if not more.) First, the semiconductor industry suffered from the global supply chain disruption. Second, geopolitical tensions between Taiwan and China cloud SIMO’s overall narrative. Still, Beijing may have plenty on its hands with internal struggles. Also, at some point, normalization will materialize in the semiconductor space.
Financially, SIMO more than justifies its inclusion as one of the best mid-cap stocks to buy. Primarily, the company features zero debt, affording it incredible flexibility. Also, it features solid revenue growth and strong profit margins. Finally, the market prices SIMO at about 10-times forward earnings, below the sector median of 17 times.
Best Mid-Cap Stock: ArcBest (ARCB)
Operating out of Arkansas, ArcBest (NASDAQ:ARCB) is an American holding company for truckload and less-than-truckload freight, freight brokerage, household good moving and transportation management companies. Presently, ArcBest commands a market cap just under $2 billion. Since the beginning of this year, ARCB has dropped more than 28% of equity value.
Fundamentally, the contrarian case for ARCB as one of the best mid-cap stocks to buy centers on hopeful economic normalization. Better yet, investors seem to be recognizing this hypothesis as a non-zero probability. In the trailing month, ARCB gained more than 3%. Also, it’s worth pointing out that according to TipRanks, ARCB features a “strong buy” consensus rating. Notably, no analyst issued a sell rating.
Adding to the enticing profile, Gurufocus labels ArcBest as modestly undervalued. At time of writing, the market prices ARCB at 6.4 times forward earnings. In contrast, the median for the transportation industry is 12.2 times.
Fulgent Genetics (FLGT)
Headquartered in Temple City, California, Fulgent Genetics (NASDAQ:FLGT) represents a premier, full-service genomic testing company built around a foundational technology platform. Per its website, Fulgent focuses on transforming patient care in oncology, anatomic pathology, infectious and rare diseases and reproductive health. Currently, Fulgent carries a market cap of a bit more than $1 billion.
To be fair, companies tied to medical technologies tend to be binary, all-or-nothing affairs. Certainly, FLGT rates among the more volatile names among the best mid-cap stocks to buy. Since the January opener, shares tumbled more than 62% in the charts. However, in the trailing five sessions, FLGT at one point fought back up to nearly 1% above parity.
Financially, investors will likely tune into Fulgent’s proposition because of its balance sheet. Featuring a cash-to-debt ratio of nearly 28 times, management enjoys a level of flexibility that most competitors simply don’t own. As well, Wall Street prices FLGT at 4.2 times trailing earnings, which is significantly undervalued.
Best Mid-Cap Stocks: Winnebago Industries (WGO)
Based out of Forest City, Iowa, Winnebago Industries (NYSE:WGO) probably needs no introduction. But just in case, the company manufactures recreational vehicles and light-to-medium utility vehicles. At the moment, Winnebago carries a market cap of $1.79 billion. Since the start of the year, WGO has lost 22.5% of equity value.
To be fair, the volatility in WGO doesn’t surprise most observers. During the early phase of the Covid-19 crisis, RV-related names soared as people could vacation without interacting with others. Now that fears of the pandemic have faded, WGO doesn’t seem as relevant. However, it still may belong on a list of best mid-cap stocks to buy because of the wealth gap. In other words, those with means might gravitate toward the company’s products.
Whether you buy that thesis or not, Winnebago offers compelling financials. Backed by a stable balance sheet, WGO features excellent revenue growth and strong profit margins. As well, the market prices shares at 7.3 times forward earnings. This compares favorably to the industry median of 10 times. Therefore, it’s worth considering for the best mid-cap stocks to buy.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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