Mid-cap stocks often strike the right balance between having proven business models and market opportunities that can support $100 billion corporations. However, they face intense competition from scaled industry giants and can be disrupted by new innovative players vying for a slice of the pie.
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. That said, here is one mid-cap stock with huge upside potential and two that could be down big.
Two Mid-Cap Stocks to Sell:
Lattice Semiconductor (LSCC)
Market Cap: $12.88 billion
A global leader in its category, Lattice Semiconductor (NASDAQ: LSCC) is a semiconductor designer specializing in customer-programmable chips that enhance CPU performance for intensive tasks such as machine learning.
Why Are We Hesitant About LSCC?
- Annual sales declines of 15.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Efficiency has decreased over the last five years as its operating margin fell by 17.4 percentage points
- Free cash flow margin dropped by 5.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Lattice Semiconductor is trading at $94.83 per share, or 59.1x forward P/E. Check out our free in-depth research report to learn more about why LSCC doesn’t pass our bar.
Trimble (TRMB)
Market Cap: $15.33 billion
Playing a role in the construction of the Paris Grand, Trimble (NASDAQ: TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.
Why Should You Dump TRMB?
- Sales tumbled by 2.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 9.2 percentage points
Trimble’s stock price of $65.53 implies a valuation ratio of 18.9x forward P/E. Read our free research report to see why you should think twice about including TRMB in your portfolio.
One Mid-Cap Stock to Buy:
Samsara (IOT)
Market Cap: $19.56 billion
From sensors on vehicles to AI-powered cameras that help prevent accidents, Samsara (NYSE: IOT) is a cloud-based Internet of Things platform that helps businesses improve the safety, efficiency, and sustainability of their physical operations.
Why Is IOT a Good Business?
- Ability to secure long-term commitments with customers is evident in its 29.8% ARR growth over the last year
- Forecasted revenue growth of 21.8% for the next 12 months indicates its momentum over the last two years is sustainable
- Fast payback periods on sales and marketing expenses allow the company to invest heavily and onboard many customers concurrently
At $33.56 per share, Samsara trades at 10x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
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