Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here is one mid-cap stock with a long growth runway and two that may have trouble.
Two Mid-Cap Stocks to Sell:
Guidewire (GWRE)
Market Cap: $19.82 billion
Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE: GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.
Why Does GWRE Give Us Pause?
- Annual revenue growth of 12.6% over the last three years was below our standards for the software sector
- High servicing costs result in a relatively inferior gross margin of 61.9% that must be offset through increased usage
At $235.40 per share, Guidewire trades at 15.5x forward price-to-sales. If you’re considering GWRE for your portfolio, see our FREE research report to learn more.
Rocket Lab (RKLB)
Market Cap: $16.33 billion
Becoming the first private company in the Southern Hemisphere to reach space, Rocket Lab (NASDAQ: RKLB) offers rockets designed for launching small satellites.
Why Does RKLB Fall Short?
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Rocket Lab’s stock price of $35.23 implies a valuation ratio of 28.4x forward price-to-sales. To fully understand why you should be careful with RKLB, check out our full research report (it’s free).
One Mid-Cap Stock to Buy:
Lululemon (LULU)
Market Cap: $28.17 billion
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Is LULU a Top Pick?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.6% growth over the past two years
- Unique assortment of products and pricing power are reflected in its best-in-class gross margin of 58.9%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Lululemon is trading at $235.10 per share, or 15.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
