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 huge upside potential and two best left ignored.
Two Mid-Cap Stocks to Sell:
AeroVironment (AVAV)
Market Cap: $10.44 billion
Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
Why Does AVAV Worry Us?
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 15.3 percentage points
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 8.4% annually
- 6.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
AeroVironment is trading at $207.92 per share, or 55x forward P/E. Read our free research report to see why you should think twice about including AVAV in your portfolio.
Markel Group (MKL)
Market Cap: $22.72 billion
Often referred to as a "mini Berkshire Hathaway" for its three-engine business model of insurance, investments, and wholly-owned businesses, Markel Group (NYSE: MKL) is a specialty insurance company that underwrites complex risks, manages investment portfolios, and owns a diverse collection of operating businesses.
Why Are We Wary of MKL?
- Large revenue base constrains its growth potential, as seen in its unexciting 1.3% annualized increases in net premiums earned over the last two years fell below our expectations for the insurance sector
- Projected sales decline of 3.4% for the next 12 months points to a tough demand environment ahead
- Efficiency has decreased over the last five years as its pre-tax profit margin fell by 22.1 percentage points
At $1,818 per share, Markel Group trades at 1.2x forward P/B. To fully understand why you should be careful with MKL, check out our full research report (it’s free).
One Mid-Cap Stock to Buy:
Sanmina (SANM)
Market Cap: $13.92 billion
Founded in 1980, Sanmina (NASDAQ: SANM) is an electronics manufacturing services company offering end-to-end solutions for various industries.
Why Is SANM a Good Business?
- Annual revenue growth of 19.3% over the past two years was outstanding, reflecting market share gains this cycle
- Market share is on track to rise over the next 12 months as its 29.3% projected revenue growth implies demand will accelerate from its two-year trend
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 25.3% exceeded its revenue gains over the last two years
Sanmina’s stock price of $259.59 implies a valuation ratio of 22.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
