3 Mid-Cap Stocks Facing Headwinds

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.

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.

Domino's (DPZ)

Market Cap: $16.8 billion

Founded by two brothers in Michigan, Domino’s (NYSE:DPZ) is a globally recognized pizza chain known for its creative marketing and fast delivery.

Why Does DPZ Fall Short?

  1. 5.2% annual revenue growth over the last six years was slower than its restaurant peers

  2. Projected sales growth of 5.6% for the next 12 months suggests sluggish demand

  3. Operating margin didn’t move over the last year, showing it couldn’t increase its efficiency

Domino’s stock price of $492 implies a valuation ratio of 27.5x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than DPZ .

Clorox (CLX)

Market Cap: $17.1 billion

Founded in 1913 with bleach as the sole product offering, Clorox (NYSE:CLX) today is a consumer products giant whose product portfolio spans everything from bleach to skincare to salad dressing to kitty litter.

Why Are We Hesitant About CLX?

  1. Flat sales over the last three years suggest it must innovate and find new ways to grow

  2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue

  3. Free cash flow margin was stuck in limbo over the last year

At $138.28 per share, Clorox trades at 19.6x forward price-to-earnings. If you’re considering CLX for your portfolio, see our FREE research report to learn more .

West Pharmaceutical Services (WST)

Market Cap: $15.53 billion

Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE:WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.

Why Is WST Not Exciting?

  1. Flat sales over the last two years suggest it must find different ways to grow during this cycle

  2. Day-to-day expenses have swelled relative to revenue over the last two years as its adjusted operating margin fell by 5.7 percentage points

  3. Diminishing returns on capital suggest its earlier profit pools are drying up

West Pharmaceutical Services is trading at $217 per share, or 33.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why WST doesn’t pass our bar .

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