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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one mid-cap stock with massive growth potential and two that may have trouble.
Two Mid-Cap Stocks to Sell:
Biogen (BIIB)
Market Cap: $30.86 billion
Founded in 1978 and pioneering treatments for some of medicine’s most complex challenges, Biogen (NASDAQ:BIIB) develops and markets therapies for neurological conditions, including multiple sclerosis, Alzheimer’s disease, spinal muscular atrophy, and rare diseases.
Why Does BIIB Worry Us?
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Products and services are facing significant end-market challenges during this cycle as sales have declined by 4.6% annually over the last five years
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Sales were less profitable over the last five years as its earnings per share fell by 11.4% annually, worse than its revenue declines
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Diminishing returns on capital suggest its earlier profit pools are drying up
At $208.84 per share, Biogen trades at 15.5x forward P/E. Read our free research report to see why you should think twice about including BIIB in your portfolio, it’s free.
American Financial Group (AFG)
Market Cap: $11.91 billion
With roots dating back to 1872 and a business model that empowers local decision-making, American Financial Group (NYSE:AFG) is an insurance holding company that specializes in commercial property and casualty insurance products for businesses through its Great American Insurance Group.
Why Do We Think AFG Will Underperform?
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Growth in insurance policies was lackluster over the last two years as its 3.2% annual growth underperformed the typical financial institution
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Earnings per share lagged its peers over the last two years as they only grew by 2.5% annually
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Annual book value per share declines of 6.4% for the past five years show its capital management struggled during this cycle
American Financial Group is trading at $143.53 per share, or 2.3x forward P/B. To fully understand why you should be careful with AFG, check out our full research report (it’s free).
One Mid-Cap Stock to Buy:
DexCom (DXCM)
Market Cap: $29.46 billion
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.
