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Goldilocks Investing: 7 Mid-Cap Stocks That Are Just Right

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Mid-cap stocks present an especially enticing narrative at junctures such as this, when it’s difficult to decipher the market’s trajectory. Stated differently, sometimes it’s best just to drive down the middle lane.

Yes, large-capitalization enterprises offer (generally speaking) the most stability. That could be useful for conservative investors. However, for those seeking growth, the predictable nature of the big caps stymies upside potential.

Of course, one could always go with the small-cap plays to boost returns. However, due to their extreme unpredictability, the volatility risks are quite high.

On the other hand, the mid-sized enterprises present a balance between stability and growth prospects. With that, below are mid-cap stocks you should put on your radar.

Valvoline (VVV)

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At first glance, Valvoline (NYSE:VVV) seems like an unusually boring if not outright stale investment. Per its public profile, the company engages in the operation and franchising of vehicle service centers and retail stores. You go there to get quick oil-change service. That doesn’t necessarily scream viable off the top.

However, VVV could make a case for sleeper mid-cap stocks to buy. Even with higher energy prices, shares of publicly traded electric vehicle manufacturers simply didn’t perform that well. That suggests that the consumer economy is not strong enough for people to make the transition to EVs. If that’s the case, the addressable market for Valvoline could be bigger than anticipated.

Admittedly, the company’s performance in the last fiscal year wasn’t all that great. However, for the current fiscal year, experts are projecting significant growth in terms of earnings. As well, they see revenue of $1.63 billion, up 13.2% from last year’s haul of $1.44 billion.

For me, the fundamentals of poor EV demand makes VVV very attractive. It’s one of the mid-cap stocks to consider.

Semtech (SMTC)

SMTC stock: The Semtech logo on a sign outside its building

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Listed under the technology ecosystem, Semtech (NASDAQ:SMTC) specializes in semiconductors. Specifically, it designs, develops, manufactures and markets analog and mixed-signal products and advanced algorithms. It offers significant relevancies for various infrastructural and industrial applications, including data centers, enterprise networks and passive optical networks.

In my opinion, Semtech could potentially piggyback off other innovations, such as artificial intelligence. With AI demand rising, so too will the data center ecosystem. Subsequently, the tailwind should help lift SMTC stock higher. Notably, analysts peg shares a unanimous strong buy with a $38.31 average price target.

Last fiscal year, Semtech incurred a bum note in the fourth quarter, producing a loss per share of 6 cents against the expected target of 3 cents in the red. However, the average quarterly surprise came out to 147.6% last year, suggesting resiliency.

For the current fiscal year, analysts believe there will only be modest growth. However, the following fiscal year could see sales shoot to $1.03 billion, well above fiscal 2023’s print of $868.76 million. Given the relevancies, it’s one of the mid-cap stocks to consider.

Arch Resources (ARCH)

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Falling under the basic materials industry, Arch Resources (NYSE:ARCH) works in the coking coal specialty. Specifically, it engages in the production and sale of metallurgical products. It operates in two segments: Metallurgical and Thermal. While the sector faces political threats, the tightness in this year’s election cycle probably means that no one candidate can take a draconian stance on any one industry.

After all, every occupation category features voters. What’s more, amid explosive electricity demand due to factors such as data center acceleration, America may be running out of power. So, while Arch Resources might seem an anachronistic idea, it could be one of the mid-cap stocks to buy.

For full disclosure, last fiscal year’s performance was a mess. Overall, the average quarterly surprise came out to 9.3% below expectations. Indeed, the only hit occurred in Q3. And to be quite blunt, analysts are projecting slowed growth in both sales and earnings for fiscal 2024.

Yet they’re also projecting a strong buy with a $182 price target. That may be because of the aforementioned power crisis and the tight political situation.

Essential Utilities (WTRG)

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Source: Sambulov Yevgeniy/ShutterStock.com

Working in the regulated water space, Essential Utilities (NYSE:WTRG) through its subsidiaries operates regulated utilities that provide water, wastewater or natural gas services in the U.S. What I appreciate about major utility companies is their natural monopoly. Would-be competitors face a host of steep obstacles, not the least of which are regulatory hurdles. Effectively, then, companies like Essential are entrenched.

It’s like a bully – if you can’t beat ‘em, join ‘em. Not surprisingly, analysts are enthusiastic about WTRG stock. In fact, they rate shares a unanimous strong buy with a $41.50 average price target. And while its performance in fiscal 2023 wasn’t really that exciting, the average earnings surprise came out to 0.7% above expectations.

For the current fiscal year, analysts are seeking earnings per share of $1.98 on revenue of $2.36 billion. That’s a notable improvement over last year’s print of earnings of $1.86 on sales of $2.05 billion. In my opinion, this is an easy case for mid-cap stocks to buy.

Wix (WIX)

WIX sign on the office building in Tel-Aviv high tech zone. WIX Logo.

Source: MagioreStock / Shutterstock.com

Operating in the technology sphere, Wix (NASDAQ:WIX) technically falls under the infrastructure software space. According to its public profile, Wix operates as a cloud-based web development platform for registered users and creators worldwide. If you sift through the word salad, the company provides an intuitive canvas for building websites. It functions via a graphical user interface so it’s super convenient.

Analysts really appreciate the idea too. Among 18 experts, 17 of them peg WIX as a buy. Further, the average price target stands at $157.29, implying decent growth. Fundamentally, Wix should benefit from the rise of the gig economy. Further, even with layoffs rising in certain sectors, many workers may decide to be independent contractors, which may increase the company’s total addressable market.

The financial performance is encouraging. Last fiscal year, Wix’s average positive earnings surprise clocked in at 188.15%. For the current fiscal year, analysts are projecting EPS of $4.84 on revenue of $1.75 billion. These stats represent a noticeable improvement over last year’s EPS of $4.39 on sales of $1.56 billion. It’s easily a name for mid-cap stocks to buy.

Six Flags (SIX)

Customers riding a rollercoaster at a Six Flags park in Maryland.

Source: Cvandyke / Shutterstock

Listed under the broad consumer cyclical industry, Six Flags (NYSE:SIX) represents one of the most popular theme parks and water parks. Typically, it’s a solid investment although the post-pandemic cycle is a tricky one for SIX stock. As evidence, shares have lost nearly 52% of equity value over the past five years. Still, it could be one of the ideas to consider for mid-cap stocks for speculators.

That’s because people are still interested in travel and “experiential” services. According to Deloitte, the phenomenon of revenge travel has waned. However, a new era of prioritizing travel may be emerging per its report. If so, SIX is worth putting on your radar. Analysts are doing exactly that, pegging shares a consensus strong buy with a $29.63 average price target.

If Deloitte’s research holds true, SIX could be a surprising idea for mid-cap stocks. Yes, it largely floundered last fiscal year. However, experts expect EPS this fiscal year to hit $1.79, a big improvement over last year’s 46 cents. Also, revenue could land at $1.51 billion, up 5.6%.

Marriott Vacations (VAC)

Beautiful beach. Chairs on the sandy beach near the sea. Summer holiday and vacation concept for tourism. Inspirational tropical landscape. Tranquil scenery, relaxing beach, tropical landscape design. SLNA stock

Source: icemanphotos / Shutterstock.com

Perhaps the riskiest idea on this list of mid-cap stocks, Marriott Vacations (NYSE:VAC) also falls under the broad consumer cyclical space. According to its corporate profile, Marriott develops, markets, sells and manages vacation ownership and related businesses, products and services in the U.S. and internationally. If people – particularly wealthier consumers – are prioritizing travel, VAC stock should be on your radar.

To be fair, Marriott Vacations has been hit or miss last fiscal year. Its best performance came in Q1 2023, when EPS of $2.54 beat out the consensus target by nearly 31%. However, its worst performance was in Q3 when EPS of $1.20 was down 44.4% against the consensus view. Subsequently, analysts rate shares a moderate buy with a $109.57 price target.

However, the most optimistic target calls for $159, which implies nearly 58% upside potential. How it could get there is a recovery in the vacation home space. Analysts are projecting revenue to land at $4.8 billion in the current fiscal year, up 51.7% from last year’s haul of $3.17 billion.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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