1 Mid-Cap Stock to Keep an Eye On and 2 to Approach with Caution

Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.

Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here is one mid-cap stock with a long growth runway and two best left ignored.

Two Mid-Cap Stocks to Sell:

Tyson Foods (TSN)

Market Cap: $21.41 billion

Started as a simple trucking business, Tyson Foods (NYSE:TSN) is one of the world’s largest producers of chicken, beef, and pork.

Why Should You Dump TSN?

  1. 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 2.7% for the last three years

  2. Gross margin of 6.6% is an output of its commoditized products

  3. Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term

Tyson Foods’s stock price of $59.99 implies a valuation ratio of 16.4x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than TSN .

TransUnion (TRU)

Market Cap: $15.92 billion

One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE:TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.

Why Do We Think Twice About TRU?

  1. Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 2 percentage points

  2. Free cash flow margin shrank by 10.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

  3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

TransUnion is trading at $81.11 per share, or 19.4x forward price-to-earnings. Read our free research report to see why you should think twice about including TRU in your portfolio, it’s free .

One Mid-Cap Stock to Watch:

Lennox (LII)

Market Cap: $18.85 billion

Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.

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