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.

This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here is one mid-cap stock with a long growth runway and two that may have trouble.

Two Mid-Cap Stocks to Sell:

onsemi (ON)

Market Cap: $23.36 billion

Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.

Why Is ON Not Exciting?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 14.8% annually over the last two years
2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.9%
3. Efficiency has decreased over the last five years as its operating margin fell by 17.7 percentage points

onsemi is trading at $59.75 per share, or 20.7x forward P/E. Check out our free in-depth research report to learn more about why ON doesn’t pass our bar.

J. M. Smucker (SJM)

Market Cap: $10.71 billion

Best known for its fruit jams and spreads, J.M Smucker (NYSE: SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.

Why Are We Out on SJM?

1. Flat unit sales over the past two years suggest it might have to lower prices to stimulate growth
2. Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 11.4 percentage points
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging

At $101 per share, J. M. Smucker trades at 10x forward P/E. Read our free research report to see why you should think twice about including SJM in your portfolio.

One Mid-Cap Stock to Watch:

Xylem (XYL)

Market Cap: $29.3 billion

Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Why Do We Like XYL?

1. Annual revenue growth of 13.1% over the past five years was outstanding, reflecting market share gains this cycle
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 19.8% outpaced its revenue gains
3. Free cash flow margin increased by 3.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Xylem’s stock price of $120.63 implies a valuation ratio of 21.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

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