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.
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.
Centene (CNC)
Market Cap: $19.64 billion
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE: CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Why Are We Cautious About CNC?
- Weak customer trends over the past two years suggest it may need to improve its products, pricing, or go-to-market strategy
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 5.1% annually while its revenue grew
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Centene’s stock price of $39.74 implies a valuation ratio of 16.5x forward P/E. Read our free research report to see why you should think twice about including CNC in your portfolio.
Jazz Pharmaceuticals (JAZZ)
Market Cap: $10.31 billion
Originally founded in 2003 and now headquartered in Ireland following a 2012 tax inversion merger, Jazz Pharmaceuticals (NASDAQGS:JAZZ) develops and markets medicines for sleep disorders, epilepsy, and cancer, with a focus on treatments for patients with limited therapeutic options.
Why Are We Wary of JAZZ?
- Muted 4.7% annual revenue growth over the last two years shows its demand lagged behind its healthcare peers
- Issuance of new shares over the last five years caused its earnings per share to fall by 8.7% annually while its revenue grew
- 5× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
At $169.67 per share, Jazz Pharmaceuticals trades at 7.5x forward P/E. Dive into our free research report to see why there are better opportunities than JAZZ.
Globe Life (GL)
Market Cap: $11.35 billion
With roots dating back to 1900 and a rebranding from Torchmark Corporation in 2019, Globe Life (NYSE: GL) is an insurance holding company that offers life insurance, supplemental health insurance, and annuity products through various distribution channels.
Why Does GL Fall Short?
- 4.5% annual revenue growth over the last two years was slower than its insurance peers
- Sluggish 4.6% annualized growth in net premiums earned over the last two years indicates the firm trailed its insurance peers
- Annual book value per share declines of 2% for the past five years show its capital management struggled during this cycle
Globe Life is trading at $142.81 per share, or 1.9x forward P/B. To fully understand why you should be careful with GL, check out our full research report (it’s free for active Edge members).
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