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.
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. That said, here are three mid-cap stocks to avoid and some other investments you should consider instead.
Ralph Lauren (RL)
Market Cap: $17.99 billion
Originally founded as a necktie company, Ralph Lauren (NYSE: RL) is an iconic American fashion brand known for its classic and sophisticated style.
Why Are We Wary of RL?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Projected sales growth of 5.3% for the next 12 months suggests sluggish demand
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 1.5 percentage points over the next year
Ralph Lauren is trading at $302.30 per share, or 20.8x forward P/E. To fully understand why you should be careful with RL, check out our full research report (it’s free).
Biogen (BIIB)
Market Cap: $19.39 billion
Founded in 1978 and pioneering treatments for some of medicine's most complex challenges, Biogen (NASDAQ: BIIB) develops and markets therapies for neurological conditions, including multiple sclerosis, Alzheimer's disease, spinal muscular atrophy, and rare diseases.
Why Do We Think Twice About BIIB?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.2% annually over the last five years
- Projected sales decline of 7% for the next 12 months points to an even tougher demand environment ahead
- Performance over the past five years shows each sale was less profitable as its earnings per share dropped by 15.2% annually, worse than its revenue
At $134 per share, Biogen trades at 8.7x forward P/E. Read our free research report to see why you should think twice about including BIIB in your portfolio.
Zebra (ZBRA)
Market Cap: $16.12 billion
Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ: ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations.
Why Do We Pass on ZBRA?
- Sales tumbled by 2.9% annually over the last two years, showing market trends are working against its favor during this cycle
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share have dipped by 3.1% annually over the past two years, which is concerning because stock prices follow EPS over the long term
Zebra’s stock price of $318 implies a valuation ratio of 20.8x forward P/E. If you’re considering ZBRA for your portfolio, see our FREE research report to learn more.
Stocks We Like 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 9 Market-Beating Stocks. 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-small-cap company Comfort Systems (+782% 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
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