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.
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 a long growth runway and two best left ignored.
Market Cap: $22.95 billion
As the silent guardian of the internet’s roadmap, VeriSign (NASDAQ:VRSN) operates the authoritative registry for .com and .net domain names, enabling websites to be found reliably when users type web addresses.
Why Do We Think Twice About VRSN?
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Sales trends were unexciting over the last two years as its 4.8% annual growth was well below the typical software company
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Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.9%
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Static operating margin over the last year shows it couldn’t become more efficient
VeriSign is trading at $245.25 per share, or 13.6x forward price-to-sales. Read our free research report to see why you should think twice about including VRSN in your portfolio, it’s free for active Edge members.
Market Cap: $19.6 billion
Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE:KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states.
Why Are We Wary of KEY?
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2.8% annual net interest income growth over the last five years was slower than its banking peers
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Net interest margin of 2.4% is well below other banks, signaling its loans aren’t very profitable
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Tangible book value per share was flat over the last five years, indicating it’s failed to build equity value this cycle
KeyCorp’s stock price of $17.63 implies a valuation ratio of 1.1x forward P/B. Check out our free in-depth research report to learn more about why KEY doesn’t pass our bar.
Market Cap: $16.36 billion
Getting its start in daily fantasy sports, DraftKings (NASDAQ:DKNG) is a digital sports entertainment and gaming company.
Why Are We Fans of DKNG?
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Rise in monthly unique players indicates high demand for its offerings
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Notable projected revenue growth of 25.1% for the next 12 months hints at market share gains
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Free cash flow margin is forecasted to grow by 4.9 percentage points in the coming year, potentially giving the company more chips to play with
