3 Mid-Cap Stocks Walking a Fine Line

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. Keeping that in mind, here are three mid-cap stocks to avoid and some other investments you should consider instead.

GoDaddy (GDDY)

Market Cap: $25.42 billion

Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.

Why Does GDDY Give Us Pause?

1. Underwhelming ARR growth of 7.8% over the last year suggests the company faced challenges in acquiring and retaining long-term customers
2. Anticipated sales growth of 7.1% for the next year implies demand will be shaky
3. High servicing costs result in a relatively inferior gross margin of 64% that must be offset through increased usage

At $178.43 per share, GoDaddy trades at 5.2x forward price-to-sales. Check out our free in-depth research report to learn more about why GDDY doesn’t pass our bar.

Ball (BALL)

Market Cap: $15.26 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 Should You Dump BALL?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Ball is trading at $55.10 per share, or 15.2x forward P/E. Dive into our free research report to see why there are better opportunities than BALL.

Illumina (ILMN)

Market Cap: $13.93 billion

Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ:ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.

Why Do We Pass on ILMN?

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. Earnings per share fell by 8.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Illumina’s stock price of $87.90 implies a valuation ratio of 19.1x forward P/E. If you’re considering ILMN for your portfolio, see our FREE research report to learn more.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.