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.
These dynamics can rattle even the most seasoned professionals, which is why we started StockStory – to help you separate the good companies from the bad. Keeping that in mind, here is one mid-cap stock with massive growth potential and two best left ignored.
Market Cap: $13.64 billion
Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE:JLL) is a company specializing in real estate advisory and investment management services.
Why Do We Avoid JLL?
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Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 6.9% for the last five years
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Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.2% for the last two years
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Underwhelming 7.8% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging
JLL’s stock price of $287.91 implies a valuation ratio of 16x forward P/E. Check out our free in-depth research report to learn more about why JLL doesn’t pass our bar.
Market Cap: $24.78 billion
Founded in 1889 during Chicago’s post-Great Fire rebuilding boom, Northern Trust (NASDAQ:NTRS) provides wealth management, asset servicing, and banking solutions to corporations, institutions, families, and high-net-worth individuals globally.
Why Does NTRS Give Us Pause?
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Sales trends were unexciting over the last five years as its 4.9% annual growth was below the typical financials company
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Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 5.1% annually
Northern Trust is trading at $131.43 per share, or 14.5x forward P/E. Read our free research report to see why you should think twice about including NTRS in your portfolio, it’s free for active Edge members.
Market Cap: $20.9 billion
Formed from a merger of 12 companies, Curtiss-Wright (NYSE:CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.
