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 is one mid-cap stock with huge upside potential and two that may have trouble.
Two Mid-Cap Stocks to Sell:
Genuine Parts (GPC)
Market Cap: $19.3 billion
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Why Does GPC Fall Short?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.7% for the last six years
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Free cash flow margin shrank by 3.4 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
Genuine Parts’s stock price of $138.75 implies a valuation ratio of 17x forward P/E. If you’re considering GPC for your portfolio, see our FREE research report to learn more.
Rivian (RIVN)
Market Cap: $16.03 billion
The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ: RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.
Why Do We Think Twice About RIVN?
- Negative 49.3% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $13.24 per share, Rivian trades at 2.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than RIVN.
One Mid-Cap Stock to Buy:
Lululemon (LULU)
Market Cap: $24.24 billion
Originally serving yogis and hockey players, Lululemon (NASDAQ: LULU) is a designer, distributor, and retailer of athletic apparel for men and women.
Why Will LULU Beat the Market?
- 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
- Collection of products is difficult to replicate at scale and results in a best-in-class gross margin of 58.9%
- LULU is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Lululemon is trading at $202.53 per share, or 13.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out 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-micro-cap company Tecnoglass (+1,754% 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
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