Hi, Fools. I’m back to call your attention to three attractive mid-cap 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:
- more upside potential than large “blue-chip” companies; and
- less downside risk than speculative small-caps.
In other words, if you want to double your money in 2020 while limiting your downside, mid-cap stocks offer a reasonable way to do it.
Let’s get to it.
Leading off our list this week is Aritzia, which currently sports a market cap of $2 billion. Shares of the apparel retailer are up about 8% over the past year.
The stock has been a bit sluggish in 2019, but Aritzia seems to be carrying plenty of operating momentum into 2020. In the company’s most recent results, net income increased 18.6% as revenue improved 17%.
More importantly, same-store sales climbed an impressive 8.4%, suggesting that Aritzia’s competitive position continues to strengthen.
“We are confident our growing brand awareness and the strategic investments we are making to elevate our client experience will enable us to deliver consistent, profitable growth and enhance shareholder value in the years to come,” said Founder and CEO Brian Hill.
Aritzia shares trade at a forward P/E of 21.
With a market cap of $4.2 billion, Spin Master is our next mid-cap marvel. Shares of the toy company are up slightly over the past year.
Concerns over slowing growth and intensifying competition have pressured the stock a bit in 2019, but Spin Master might now be too attractive to pass up. Despite a 12% revenue decline in the most recent quarter, the gross margin held firm, and free cash flow clocked in at a still solid US$129 million.
“While our performance in the third quarter was negatively affected by several challenges, we do not believe it is indicative of our expected full year 2019 performance nor our long-term growth and value creation prospects,” Chairman and Co-CEO Ronnen Harary reassured investors.
Spin Master shares trade at a forward P/E in the low-20s.
Making a U-turn
Rounding out our list this week is Cameco, which sports a market cap of $5 billion. Shares of the uranium producer are down 23% over the past year.
While the shares have been weighed down heavily by soft uranium prices, Cameco’s fundamentals have remained relatively strong. Despite a steep revenue drop in Q3, Cameco managed to strengthen its balance sheet and generate operating cash flow of $232 million.
Looking ahead, Cameco expects Q4 to be the largest delivery quarter this year.
“We are optimistic about the long-term fundamentals driven by the increasing recognition of the role nuclear must play in ensuring safe, reliable, and affordable low-carbon electricity generation,” said CEO Tim Getzel. “We recognize that today’s low price is creating tomorrow’s opportunity for us.”
Cameco trades at a forward P/E of 57.
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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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of and recommends Spin Master.