3 Mid-Cap Stocks with Questionable Fundamentals

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

Liberty Broadband (LBRDK)

Market Cap: $14.5 billion

Operating across the United States, Liberty Broadband (NASDAQ:LBRDK) is a provider of high-speed internet, cable television, and telecommunications services across various markets.

Why Do We Steer Clear of LBRDK?

1. Muted 2.7% annual revenue growth over the last two years shows its demand lagged behind its business services peers
2. Free cash flow margin dropped by 34.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $99.08 per share, Liberty Broadband trades at 56.6x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why LBRDK doesn’t pass our bar.

Service International (SCI)

Market Cap: $11.17 billion

Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.

Why Is SCI Not Exciting?

1. Demand for its offerings was relatively low as its number of funeral services performed has underwhelmed
2. Estimated sales growth of 2.6% for the next 12 months is soft and implies weaker demand
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Service International is trading at $78.15 per share, or 19.9x forward P/E. If you’re considering SCI for your portfolio, see our FREE research report to learn more.

Incyte (INCY)

Market Cap: $12.25 billion

Founded in 1991 and evolving from a genomics research firm to a commercial-stage drug developer, Incyte (NASDAQ:INCY) is a biopharmaceutical company that discovers, develops, and commercializes proprietary therapeutics for cancer and inflammatory diseases.

Why Does INCY Fall Short?

1. Efficiency has decreased over the last five years as its adjusted operating margin fell by 15.2 percentage points
2. 13.5 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Incyte’s stock price of $63.81 implies a valuation ratio of 10.8x forward P/E. Dive into our free research report to see why there are better opportunities than INCY.

High-Quality Stocks for All Market Conditions

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