1 Mid-Cap Stock on Our Buy List and 2 Facing Challenges

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 is one mid-cap stock with massive growth potential and two best left ignored.

Two Mid-Cap Stocks to Sell:

BJ's (BJ)

Market Cap: $12.61 billion

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

Why Does BJ Give Us Pause?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
2. Widely-available products (and therefore stiff competition) result in an inferior gross margin of 18.5% that must be offset through higher volumes
3. Operating margin of 3.9% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments

At $96.15 per share, BJ's trades at 21.7x forward P/E. If you’re considering BJ for your portfolio, see our FREE research report to learn more.

Assurant (AIZ)

Market Cap: $11.15 billion

With roots dating back to 1892 when it was founded by a Civil War veteran, Assurant (NYSE:AIZ) provides specialized insurance products and services that protect major consumer purchases like mobile devices, vehicles, homes, and appliances.

Why Are We Wary of AIZ?

1. Outsized scale creates growth headwinds as its 4.8% annualized net premiums earned increases over the last five years underperformed other financial institutions
2. Earnings per share lagged its peers over the last two years as they only grew by 13.1% annually
3. Annual book value per share growth of 2.8% over the last five years lagged behind its insurance peers as its large balance sheet made it difficult to generate incremental capital growth

Assurant is trading at $224.12 per share, or 1.7x forward P/B. Read our free research report to see why you should think twice about including AIZ in your portfolio.

One Mid-Cap Stock to Buy:

LPL Financial (LPLA)

Market Cap: $25.56 billion

As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ:LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.

Why Is LPLA a Top Pick?

1. Annual revenue growth of 30% over the past two years was outstanding, reflecting market share gains this cycle
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 25.5% outpaced its revenue gains
3. Stellar return on equity showcases management’s ability to surface highly profitable business ventures

LPL Financial’s stock price of $319.31 implies a valuation ratio of 13.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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