3 Mid-Cap Stocks with Warning Signs

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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here are three mid-cap stocks to swipe left on and some alternatives you should look into instead.

Manhattan Associates (MANH)

Market Cap: $13.63 billion

Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

Why Is MANH Not Exciting?

1. Offerings struggled to generate meaningful interest as its average billings growth of 5.7% over the last year did not impress
2. Estimated sales growth of 4.3% for the next 12 months implies demand will slow from its three-year trend
3. Gross margin of 56.3% reflects its high servicing costs

Manhattan Associates’s stock price of $225.74 implies a valuation ratio of 12.5x forward price-to-sales. If you’re considering MANH for your portfolio, see our FREE research report to learn more.

Omnicom Group (OMC)

Market Cap: $14.4 billion

With a vast network of creative agencies that helped craft some of the most memorable ad campaigns in history, Omnicom Group (NYSE:OMC) is a strategic holding company that provides advertising, marketing, and communications services to many of the world's largest companies.

Why Are We Wary of OMC?

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 4.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
3. Eroding returns on capital suggest its historical profit centers are aging

Omnicom Group is trading at $74.79 per share, or 8.6x forward P/E. Dive into our free research report to see why there are better opportunities than OMC.

American Financial Group (AFG)

Market Cap: $10.5 billion

With roots dating back to 1872 and a business model that empowers local decision-making, American Financial Group (NYSE:AFG) is an insurance holding company that specializes in commercial property and casualty insurance products for businesses through its Great American Insurance Group.

Why Does AFG Fall Short?

1. 6.6% annual net premiums earned growth over the last two years was slower than its insurance peers
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 5.5% annually
3. Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 1.4% annually over the last five years

At $125.70 per share, American Financial Group trades at 2.2x forward P/B. Read our free research report to see why you should think twice about including AFG in your portfolio.

Stocks We Like More

Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 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 Comfort Systems (+782% 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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