1 Mid-Cap Stock with Impressive Fundamentals and 2 We Avoid

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.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one mid-cap stock with huge upside potential and two best left ignored.

Two Mid-Cap Stocks to Sell:

Darden (DRI)

Market Cap: $19.96 billion

Founded in 1968 as Red Lobster, Darden (NYSE:DRI) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.

Why Is DRI Not Exciting?

1. Sizable revenue base leads to growth challenges as its 6.3% annual revenue increases over the last six years fell short of other restaurant companies
2. Weak same-store sales trends over the past two years suggest there may be few opportunities in its core markets to open new restaurants
3. Challenging supply chain dynamics and bad unit economics are reflected in its low gross margin of 21.6%

At $171.99 per share, Darden trades at 15.9x forward P/E. Check out our free in-depth research report to learn more about why DRI doesn’t pass our bar.

Ball (BALL)

Market Cap: $12.66 billion

Started with a $200 loan in 1880, Ball (NYSE:BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.

Why Do We Think BALL Will Underperform?

1. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 21.5%
3. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

Ball is trading at $47.27 per share, or 12.2x forward P/E. To fully understand why you should be careful with BALL, check out our full research report (it’s free for active Edge members).

One Mid-Cap Stock to Buy:

Coherent (COHR)

Market Cap: $24.83 billion

Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE:COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.

Why Is COHR a Top Pick?

1. Annual revenue growth of 16.9% over the past five years was outstanding, reflecting market share gains this cycle
2. Exciting sales outlook for the upcoming 12 months calls for 14.3% growth, an acceleration from its two-year trend
3. Earnings per share have massively outperformed its peers over the last two years, increasing by 38.4% annually

Coherent’s stock price of $159.16 implies a valuation ratio of 29.5x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

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