3 Mid-Cap Stocks Skating on Thin Ice

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.

This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are three mid-cap stocks to avoid and some other investments you should consider instead.

IDEX (IEX)

Market Cap: $13.58 billion

Founded in 1988, IDEX (NYSE:IEX) is a global manufacturer specializing in highly engineered products such as pumps, flow meters, and fluidics systems for various industries.

Why Do We Think IEX Will Underperform?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Free cash flow margin shrank by 5.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Diminishing returns on capital suggest its earlier profit pools are drying up

IDEX’s stock price of $179.77 implies a valuation ratio of 21.5x forward P/E. Check out our free in-depth research report to learn more about why IEX doesn’t pass our bar.

Fortive (FTV)

Market Cap: $17.1 billion

Taking its name from the Latin root of "strong", Fortive (NYSE:FTV) manufactures products and develops industrial software for numerous industries.

Why Should You Dump FTV?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Anticipated sales growth of 1.9% for the next year implies demand will be shaky
3. Underwhelming 5.4% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up

At $50.11 per share, Fortive trades at 12.3x forward P/E. To fully understand why you should be careful with FTV, check out our full research report (it’s free).

Principal Financial Group (PFG)

Market Cap: $17.89 billion

Founded in 1879 by a Civil War veteran seeking to provide financial security for families, Principal Financial Group (NASDAQGS:PFG) provides retirement solutions, asset management, and employee benefits to businesses, individuals, and institutional clients globally.

Why Are We Out on PFG?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last five years
2. Expenses have increased as a percentage of revenue over the last two years as its pre-tax profit margin fell by 31.6 percentage points
3. Annual earnings per share growth of 4.6% underperformed its revenue over the last two years, showing its incremental sales were less profitable

Principal Financial Group is trading at $79.90 per share, or 1.5x forward P/B. If you’re considering PFG for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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-small-cap company Exlservice (+354% 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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