Yahoo Finance 5 Must-Buy Mid-Cap Stocks With Strong Near-Term Potential
U.S. stock markets have witnessed renewed momentum in May after a brief halt in April. Market participants witnessed an impressive 15-month rally before April. The rebound in May has taken a section of financial experts by surprise as they warned of further downside due to higher stock valuations and the Fed’s decision to keep interest rates higher for longer than expected.
Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 3.4%, 11.9% and 14.6%, respectively. The mid-cap benchmark — the S&P 400 Index — also advanced 7.4% year to date.
Within the mid-cap space, a handful of stocks (market capital > $8 billion< $10 billion) have the potential to become large caps in 2024. Investment in these stocks with the most favorable Zacks Rank should lead to handsome returns this year.
Why Should You Invest in Mid-Cap Stocks?
Investment in mid-cap stocks is often recognized as a good portfolio diversification strategy. These stocks combine the attractive attributes of both small and large-cap stocks. Top-ranked, mid-cap stocks have a high potential to enhance their profitability, productivity, and market share. These may also become large-caps over time.
If economic growth slows down due to any unforeseen internal or external disturbance, mid-cap stocks will be less susceptible to losses than their large-cap counterparts owing to less international exposure.
On the other hand, if the economy continues to thrive, these stocks will gain more than small caps due to established management teams, a broad distribution network, brand recognition and ready access to capital markets.
Our Top Picks
We have narrowed our search to five mid-caps that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Finally, each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Levi Strauss & Co. LEVI designs, markets, and sells apparel and related accessories for men, women, and children worldwide. LEVI offers jeans, casual and dress pants, activewears, tops, shorts, skirts, dresses, jumpsuits, shirts, sweaters, jackets, footwear, and related accessories under the Levi's, Dockers, Signature by Levi Strauss & Co., Denizen, and Beyond Yoga brands.
LEVI also licenses Levi's and Dockers trademarks for various product categories, including footwear, belts, wallets, bags, outerwear, sweaters, dress shirts, kids wear, sleepwear, and hosiery.
Levi Strauss has an expected revenue and earnings growth rate of 2.9% and 15.5%, respectively, for the current year (ending November 2024). The Zacks Consensus Estimate for current-year earnings has improved 4.1% over the last 60 days.
Paylocity Holding Corp. PCTY has benefited from better sales execution and sustained investments in technological upgrades and product innovation. Higher product attach rates within PCTY’s existing clientele have been driving average revenue per client.
PCTY’s initiative to leverage generative artificial intelligence (AI) and the recent launch of premium offerings like Advanced Scheduling and Market Pay are expected to drive top-line growth. PCTY’s regular investments in technological upgrades, along with its innovative product portfolio, will continue to boost the top line. We expect fiscal 2024 net sales to increase 18.7% from fiscal 2023.
Paylocity Holding has an expected revenue and earnings growth rate of 18.8% and 21.4%, respectively, for the current year (ending June 2024). The Zacks Consensus Estimate for current-year earnings has improved 3% over the last 30 days.
AppFolio Inc. APPF provides cloud business management solutions for the real estate industry in the United States. APPF provides a cloud-based platform that enables users to automate and optimize common workflows, and tools that assist in leasing, maintenance, accounting, and other technology and services offered by third parties.
APPF also provides value-added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services.
AppFolio has an expected revenue and earnings growth rate of 24.7% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the last 30 days.
Sprouts Farmers Market Inc.’s SFM focus on product innovation, emphasis on e-commerce, expansion of private label offerings and targeted marketing with everyday great pricing bode well. SFM has been lowering operational complexity, optimizing production, improving in-stock position and updating to smaller format stores.
These efforts helped post better-than-expected first-quarter 2024 results. Buoyed by the performance, SFM provided a decent 2024 guidance. We anticipate a 3.2% year-over-year increase in comparable store sales for the year, contributing to an expected net sales growth of 7.7%.
Sprouts Farmers Market has an expected revenue and earnings growth rate of 8% and 9.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the last 30 days.
MakeMyTrip Ltd. MMYT is an online travel company that sells travel products and solutions in India, the United States, Singapore, Malaysia, Thailand, the United Arab Emirates, Peru, Colombia, Vietnam, and Indonesia. MMYT operates through three segments: Air Ticketing, Hotels and Packages, and Bus Ticketing.
MMYT’s services and products include air tickets, hotels and packages, rail tickets, bus tickets, and car hire, as well as ancillary travel requirements, such as visa processing and facilitating access to travel insurance.
MMYT allows travelers to research, plan, book, and purchase travel services and products through its websites and other technology-enhanced distribution channels, such as call centers, travel stores, and travel agents network, as well as mobile service platform.
MakeMyTrip has an expected revenue and earnings growth rate of 18.4% and 31.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 9.6% over the last 30 days.
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MakeMyTrip Limited (MMYT) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
Paylocity Holding Corporation (PCTY) : Free Stock Analysis Report
AppFolio, Inc. (APPF) : Free Stock Analysis Report
Levi Strauss & Co. (LEVI) : Free Stock Analysis Report
