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.
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 huge upside potential and two best left ignored.
Two Mid-Cap Stocks to Sell:
Roku (ROKU)
Market Cap: $14.74 billion
With a name meaning six in Japanese because it was the founder's sixth company that he started, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Why Are We Wary of ROKU?
- Focus on expanding its platform came at the expense of monetization as its average revenue per user fell by 11.4% annually
- Gross margin of 44% reflects its high servicing costs
- High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum
Roku is trading at $94.58 per share, or 30.6x forward EV/EBITDA. If you’re considering ROKU for your portfolio, see our FREE research report to learn more.
WESCO (WCC)
Market Cap: $12.28 billion
Based in Pittsburgh, WESCO (NYSE: WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.
Why Are We Hesitant About WCC?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Earnings per share have contracted by 11.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $252.27 per share, WESCO trades at 15.9x forward P/E. Read our free research report to see why you should think twice about including WCC in your portfolio.
One Mid-Cap Stock to Watch:
Dynatrace (DT)
Market Cap: $14.66 billion
With its platform processing over 30 trillion pieces of IT performance data daily, Dynatrace (NYSE: DT) provides an AI-powered platform that helps organizations monitor, secure, and optimize their applications and IT infrastructure across cloud environments.
Why Are We Fans of DT?
- Billings growth has averaged 18.9% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Prominent and differentiated software results in a premier gross margin of 81.9%
- DT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Dynatrace’s stock price of $48.62 implies a valuation ratio of 7.2x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
