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.

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:

McCormick (MKC)

Market Cap: $17.65 billion

The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE: MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.

Why Are We Hesitant About MKC?

1. Annual revenue growth of 2.1% over the last three years was below our standards for the consumer staples sector
2. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
3. Free cash flow margin dropped by 1.9 percentage points over the last year, implying the company became more capital intensive as competition picked up

McCormick’s stock price of $65.55 implies a valuation ratio of 21x forward P/E. To fully understand why you should be careful with MKC, check out our full research report (it’s free for active Edge members).

International Paper (IP)

Market Cap: $24.64 billion

Established in 1898, International Paper (NYSE: IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.

Why Do We Pass on IP?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle
2. 11.6 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
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $45.98 per share, International Paper trades at 19.1x forward P/E. Dive into our free research report to see why there are better opportunities than IP.

One Mid-Cap Stock to Watch:

BioMarin Pharmaceutical (BMRN)

Market Cap: $10.08 billion

Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ: BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.

Why Does BMRN Stand Out?

1. Impressive 17.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 22.2% outpaced its revenue gains
3. Free cash flow margin expanded by 13.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

BioMarin Pharmaceutical is trading at $52.50 per share, or 13.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

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