Wagering on mid-cap stocks can potentially unlock investment treasures typically overlooked in the bustling market. Nestled between the giants and the upstarts, these stocks, with market capitalizations in the $2 billion to $10 billion range, offer a unique blend of growth potential and stability. The SPDR S&P Midcap 400 ETF Trustwas up a healthy 20% in 2023, trailing the S&P 500’s 33% gain, yet still up by 6% YTD.
Moreover, though large-cap stocks dominate headlines and portfolios with brand visibility, and small-caps are lauded for their long-term potential, mid-caps strike a compelling balance. Investors frequently bypass this sweet spot, a decision some experts may deem a mistake. With that said, here are seven mid-cap stocks to buy, offering tremendous upside potential.
Undervalued Mid-Cap Stocks: Progyny (PGNY)
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Progyny (NASDAQ:PGNY) remains a compelling investment in the fertility benefits sector on the back of its resilient core strengths and growth metrics. Steady growth in sales, an expanding base of covered individuals, and improved service offerings continue to propel PGNY stock upward. Legislative hurdles, such as the Alabama court’s ruling, have briefly clouded the horizon. However, swift legislative adaptations and reassurances from the company leadership have alleviated investor concerns.
The company’s financial health remains excellent, evidenced by a 26% bump in revenues year-over-year (YOY) during the fourth quarter (Q4). Moreover, its initiation of a $100 million share repurchase program underlines its commitment to shareholder reward. Its role as a leader in fertility benefits, catering to the evolving needs of millennials grappling with fertility issues, anchors its appeal as a long-term investment. The firm’s ongoing client and coverage expansion makes it a compelling buy at 2.64 times forward sales.
Gaming & Leisure Properties (GLPI)
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Gaming & Leisure Properties (NASDAQ:GLPI) is one of the leading casino-related real estate investment trusts (REIT). Despite a significant reliance on PENN Entertainment (NASDAQ:PENN), which operates 34 of its 61 properties, GLPI stock has maintained a stable performance. Its recently released Q4 results showed a revenue surge of 9.7% YOY to $369 million, surpassing estimates by $7.19 million. To put things in perspective, the company has consistently outperformed its revenue forecasts for the past twelve consecutive quarters.
This performance underpins the REIT’s attractive 6.56% yield, marking nine years of consecutive payout growth. Consequently, the stock has earned a ‘moderate buy’ rating from Tipranks, with an anticipated 8% upside. The company presents a compelling value proposition by trading at 16.70 times non-GAAP earnings, which is 45% lower than the sector median. Hence, with its consistent track record of beating revenue estimates and its substantial dividend yield, GLPI stock positions itself as an attractive investment.
Science Applications International (SAIC)
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Science Applications International (NYSE:SAIC) has flown under the radar but remains a key player in the aerospace and defense industry. It stands out for its comprehensive solutions in cloud computing, cybersecurity, and digital transformation. Moreover, it caters to a prestigious clientele, including the U.S. Department of Defense, federal civilian agencies, and the intelligence community.
Demonstrating a remarkable financial performance, the firm has consistently outpaced earnings and revenue estimates since the first quarter (Q1) of 2022. The company’s third-quarter (Q3) results were particularly impressive, with a Non-GAAP EPS of $2.27, outperforming expectations by 58 cents, while sales of $1.9 billion beat forecasts by a substantial $110 million. The estimated backlog, a critical indicator of future revenue, stood at an impressive $23.1 billion at the quarter’s end.
Trading at merely one times forward sales, SAIC presents a significant value, being 32% below the sector median. As we advance, SAIC will continue to benefit from the consistent demand driven by global cybersecurity challenges and geopolitical unrest.
Invesco (IVZ)
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Invesco (NYSE:IVZ) is a distinguished player in the global asset management sector, showcasing its prowess over the years with its well-diversified business model and formidable passive investment arm. A strategic emphasis on passive products, equities, fixed income, and alternatives is paying dividends, evidenced by recent inflows and strategic prioritization. February was awesome for Invesco, with preliminary assets under management (AUM) climbing to $1.63 trillion, reflecting a 3% jump from the previous month due to favorable market returns.
Moreover, its robust net long-term inflows of $1.8 billion further highlight its growth trajectory. With anticipated rate cuts, Invesco’s performance is poised for an even more significant boost, likely enhancing its equities share. This financial health and strategic direction position Invesco as an attractive bet at 1.60 times forward sales estimates while yielding an eye-catching 5%.
Lantheus (LNTH)
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Lantheus (NASDAQ:LNTH) is revolutionizing patient care with its advanced AI tools and imaging agents, marking a major stride in the fight against cancer. Through its cutting-edge AI platform designed to interpret scan results and its partnerships in the biotech and pharma industries, Lantheus is a key player in the evolution of healthcare. Moreover, since Q4 2020, the company has consistently outpaced analyst expectations across both lines by comfortable margins.
Its impressive performance last year is shown by a more than 60% surge in Pylarify sales, resulting in a 39% jump in total revenue to $1.3 billion. To put things in perspective, Pylarify is a diagnostic tool in PET imaging for prostate cancer detection. Looking ahead, with its fiscal 2024 sales guidance set between $1.41 billion to $1.44 billion and the radiopharmaceutical sector poised for major expansion, Lantheus remains an excellent pick. It trades at just 9.50 times forward earnings, significantly below the sector median, accentuating its appeal in the burgeoning healthcare tech sector.
TKO Group (TKO)
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TKO Group (NYSE:TKO) emerges as a standout investment, effectively merging the dynamic appeal of the UFC and the WWE’s established global presence. The fusion presents an incredible investment proposition, tapping into over a billion households worldwide. Capitalizing on UFC’s explosive international expansion and WWE’s sturdy fanbase, the company is growing at a rapid pace with impressive profit margins. Its free cash flow stands at a remarkable $400 million, yielding an amazing 23.89%.
The UFC-WWE merger sets the stage for remarkable growth through diversified revenue options, including media rights, event ticketing, and branded merchandise. Its unique market positioning with proactive ventures into burgeoning sectors such as online betting underscore its potential for substantial growth. Moreover, according to Tipranks, TKO represents an attractive proposition, attracting a ‘Moderate Buy’ rating and a 29.50% upside potential from its current price.
Bill Holdings (BILL)
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Bill Holdings (NYSE:BILL) is a trailblazer in the financial software domain, redefining how businesses handle their financial operations. It operates a powerful cloud-based suite tailored for small to medium-sized businesses, streamlining financial workflows with accounts payable/receivable automation, top-tier security features, and invoice management, among other features. Bill’s approach to simplifying complex financial tasks has spurred stellar top-line growth and notable strides in reducing net losses.
Kicking off fiscal 2024, Bill announced a 33% and 22.50% sales growth in Q1 and second-quarter (Q2) respectively. signaling robust market demand. Moreover, it beat EPS estimates by four cents and 23 cents respectively in Q1 and Q2. Additionally, the company now expects adjusted EPS to be in the $2.09 to $2.31 range compared with the $1.86 average analyst estimate.
Furthermore, with a ‘Moderate Buy’ rating from Tipranks and a promising 27% anticipated upside, Bill’s stock is an attractive investment in financial software space.
On the date of publication, Muslim Farooque 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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
