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.
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 massive growth potential and two that could be down big.
Two Mid-Cap Stocks to Sell:
Ally Financial (ALLY)
Market Cap: $12.73 billion
Born from the former GMAC (General Motors Acceptance Corporation) and rebranded in 2010, Ally Financial (NYSE: ALLY) operates a digital-first bank offering auto financing, insurance, mortgage lending, and investment services to consumers and commercial clients.
Why Do We Avoid ALLY?
- Muted 2.8% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Earnings per share fell by 8.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- 10× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings
Ally Financial is trading at $42.30 per share, or 7.3x forward P/E. Read our free research report to see why you should think twice about including ALLY in your portfolio.
Regions Financial (RF)
Market Cap: $25.62 billion
Tracing its roots back to 1971 and operating in a region known as the "heart of Dixie," Regions Financial (NYSE: RF) is a financial holding company that provides banking services, wealth management, and specialty financial solutions across the South, Midwest, and Texas.
Why Are We Hesitant About RF?
- 5.3% annual net interest income growth over the last five years was slower than its banking peers
- Projected net interest income growth of 4.1% for the next 12 months suggests sluggish demand
- Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
At $30.36 per share, Regions Financial trades at 1.4x forward P/B. Dive into our free research report to see why there are better opportunities than RF.
One Mid-Cap Stock to Buy:
Ulta (ULTA)
Market Cap: $23.48 billion
Offering high-end prestige brands as well as lower-priced, mass-market ones, Ulta Beauty (NASDAQ: ULTA) is an American retailer that sells makeup, skincare, haircare, and fragrance products.
Why Is ULTA a Top Pick?
- Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 4.1% over the past two years
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Ulta’s stock price of $545.89 implies a valuation ratio of 18.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
