Hi there, Fools. I’m back to call your attention to three attractive mid-cap stocks — or, as I like to call them, my top “sweet-spot” stocks. As a quick refresher, I do this because mid-cap companies — those with a market cap of between $2 billion and $10 billion — have two key features:
- More upside potential than large “blue-chip” companies; and
- Less downside risk than speculative small-caps.
All things equal, mid-cap stocks offer investors an ideal risk/reward balance. Thus, they can be very useful in a RRSP account, where it’s especially important to build your nest egg with care and caution.
Let’s get to it.
HEX marks the spot
Leading off our list is cannabis company HEXO (TSX:HEXO), which sports a market cap of about $2.1 billion.
When investors think about the big players in the Canadian marijuana space, HEXO is often overlooked. But the well-capitalized company is quietly growing, steadily taking advantage of several favourable trends.
In March, the stock spiked after posting blowout Q2 numbers: gross revenue spiked 1,269%, dried cannabis production grew 39%, and grams sold jumped 142%.
“This quarter not only saw an exponential increase in gross revenue and production, but also saw us continue to execute on our promises including reaching a construction and licensing milestone on our 1,000,000 sq. ft. greenhouse expansion and listing on the NYSE.A,” said CEO Sebastien St-Louis.
HEXO shares are up a whopping 119% in 2019.
Yamana shares have tumbled in recent months on disappointing revenue, so highly risk-averse investors might want to stay away. That said, Yamana might be providing solid value for contrarian Fools.
In Q1, gold production still managed to grow 18% to nearly 236 thousand oz. and silver output more than tripled. Meanwhile, the stock is trading near 52-week lows.
“We had a strong first quarter both operationally and from a sustainability standpoint,” said CEO Daniel Racine in a conference call. “Our total recordable injury frequency rate declined to 0.6 during the quarter from 0.72 in the first quarter of 2018.”
Yamana shares are down 11% so far in 2019.
Rounding out our list is Montreal-based telecom Quebecor (TSX:QBR.B), which sports a market cap of about $8.5 billion.
Quebecor continues to lean on its telecom subsidiary Videotron — which connects to over 2.8 million homes in Quebec and has over 900,000 wireless subscribers — to deliver consistent results for conservative investors. In 2018, revenue improved 1.4% and adjusted operating income jumped 35% mainly on the strength of Videotron.
Additionally, management more than doubled its quarterly dividend to $0.055 per share.
“Our positive results in the fourth quarter of 2018 cap what was an excellent year in many respects, driven once again by Videotron’s strong numbers,” said President and CEO Pierre Karl Peladeau.
Quebecor shares are up 16% so far in 2019.
The bottom line
There you have it, Fools: three attractive mid-cap stocks worth checking out.
As always, they aren’t formal recommendations. View them, instead, as a jumping off point for further research. Even the best mid-cap stocks can face serious trouble from time to time, so plenty of due diligence is still required.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Brian Pacampara owns no position in any of the companies mentioned.