The Motley Fool

Want to Be a Millionaire? Take the Smart Path With These 3 Mid-Cap Stars

Image source: Getty Images

Hi, 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 reminder, I do this because mid-cap companies — those with a market cap of between $2 billion and $10 billion — have two key features:

In other words, if you want to become a millionaire over the next several decades, mid-cap stocks offer a reasonable way to do it.

Let’s get to it.

Walk in the park

Leading things fuel refiner and distributor Parkland Fuel (TSX:PKI), which has a market cap of about $6.3 billion.

Parkland continues to use its unmatched scale (1,855 retail gas stations), hefty cash flows, and strong management team to deliver the goods for shareholders. In the most recent quarter, for instance, distributable cash flow increased by $17 million to $156 million. For dividend seekers, that translates into a highly comforting dividend-payout ratio of 29%.

“The strength of Parkland’s diverse portfolio and integrated assets was on full display in the second quarter, driving outstanding results,” said CEO Bob Espey. “Our International, USA and Supply segments underpinned our performance, and we also benefited from further synergy capture including early wins within Sol.”

Parkland shares are up 21% so far in 2019.

Stan and deliver

With a market cap of $3.3 billion, engineering and construction specialist Stantec (TSX:STN)(NYSE:STN) is the next mid-cap on our list.

Stantec’s leadership position in the design space (top three in North America and top 10 in the world), fiscal discipline, and proven track record are all good reasons to keep an eye on the stock. In 2018, the company posted organic gross revenue growth of 3.3%, adjusted earnings growth of 5%, and ended the year with a backlog of $4.2 billion.

“We are focused on building the engine of the organization that will convert our record-high backlog into revenue while continuing to grow our business,” said CEO Gord Johnston in the most recent quarterly report.

Stantec shares are down about 7% over the past three months.

Renewed energy

Rounding out our list is renewable power company TransAlta Renewables (TSX:RNW), which currently sports a market cap of $3.5 billion.

The shares underperformed significantly in 2018, but 2019 continues to be a strong comeback year for TransAlta. In the most recent quarter, revenue grew 3.7% to $111 million, EBITDA increased 13% to $11 million, and distributable cash improved $6 million to $57 million.

“We are excited to continue this growth plan with the upcoming commissioning of two additional US wind projects later this year and continue to be focused on adding new accretive projects to the fleet,” said President John Kousinioris.

TransAlta shares are up 29% in 2019 and offer a rather juicy dividend yield of 7%.

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.

Fool on.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. 

 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.