2 Mid-Cap Stocks with Exciting Potential and 1 We Ignore

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 two mid-cap stocks with massive growth potential and one that could be down big.

One Mid-Cap Stock to Sell:

Stanley Black & Decker (SWK)

Market Cap: $12.67 billion

With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.

Why Should You Dump SWK?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 9.6% annually while its revenue grew
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.7 percentage points

Stanley Black & Decker’s stock price of $81.54 implies a valuation ratio of 16x forward P/E. Check out our free in-depth research report to learn more about why SWK doesn’t pass our bar.

Two Mid-Cap Stocks to Watch:

Guidewire Software (GWRE)

Market Cap: $13.76 billion

With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE:GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.

Why Do We Like GWRE?

1. Billings have averaged 20.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
2. User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
3. Has the option to reinvest or return capital to investors as its 21.3% free cash flow margin is well above its peers

Guidewire Software is trading at $161.91 per share, or 9.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.

DexCom (DXCM)

Market Cap: $28.6 billion

Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.

Why Is DXCM a Good Business?

1. Average organic revenue growth of 16.4% over the past two years demonstrates its ability to expand independently without relying on acquisitions
2. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 17.5% annually
3. Free cash flow margin expanded by 17.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

At $73.12 per share, DexCom trades at 30.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.