3 Mid-Cap Stocks We Think Twice About

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. Keeping that in mind, here are three mid-cap stocks to swipe left on and some alternatives you should look into instead.

Zoom (ZM)

Market Cap: $21.9 billion

Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ:ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.

Why Do We Think Twice About ZM?

1. Offerings struggled to generate meaningful interest as its average billings growth of 5% over the last year did not impress
2. Platform has low switching costs as its net revenue retention rate of 98% demonstrates high turnover
3. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3%

Zoom is trading at $72.36 per share, or 4.7x forward price-to-sales. Read our free research report to see why you should think twice about including ZM in your portfolio.

Clorox (CLX)

Market Cap: $15.03 billion

Founded in 1913 with bleach as the sole product offering, Clorox (NYSE:CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.

Why Does CLX Worry Us?

1. Sales stagnated over the last three years and signal the need for new growth strategies
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Forecasted revenue decline of 8.2% for the upcoming 12 months implies demand will fall off a cliff

Clorox’s stock price of $122.89 implies a valuation ratio of 19.3x forward P/E. If you’re considering CLX for your portfolio, see our FREE research report to learn more.

Hormel Foods (HRL)

Market Cap: $15.93 billion

Best known for its SPAM brand, Hormel (NYSE:HRL) is a packaged foods company with products that span meat, poultry, shelf-stable foods, and spreads.

Why Are We Cautious About HRL?

1. Shrinking unit sales over the past two years imply it may need to invest in product improvements to get back on track
2. Gross margin of 16.7% is below its competitors, leaving less money to invest in areas like marketing and production facilities
3. Performance over the past three years shows each sale was less profitable as its earnings per share dropped by 6.5% annually, worse than its revenue

At $29.07 per share, Hormel Foods trades at 16.7x forward P/E. Check out our free in-depth research report to learn more about why HRL doesn’t pass our bar.

High-Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. 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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