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2 Mid-Cap Stocks Set to Deliver Superior Returns With or Without a Vaccine

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Investors flocked to TSX-listed tech stocks amid the peak of the pandemic to gain big from the rally in the shares of the companies that benefitted from the pandemic. However, with the vaccine on the horizon, investors are dumping tech stocks and buying shares of the companies hit hard by COVID-19. 

For instance, shares of Suncor Energy and Air Canada have soared over 38% and 39%, respectively, in one month. In comparison, shares of Real MattersAbsolute Software, and Kinaxis have decreased by over 20.5%, 16.3%, and 13.7%, respectively, during the same period. 

While the positive development over the vaccine is encouraging, it is still unclear when a vaccine could arrive, raising skepticism over the stock market’s prospect. However, a few TSX-listed mid-cap stocks could continue to do well with or without the vaccine. 

These companies witness stable demand for their products and services and have strong fundamentals that provide a solid foundation for outsized growth in the coming years. Let’s focus on two top mid-cap stocks that could deliver superior returns.

Cargojet

Cargojet (TSX:CJT) stock has consistently outperformed the broader markets and generated stellar returns irrespective of the economic situation. The air cargo company witnesses sustained demand, thanks to its robust delivery capabilities, and holds a lion’s share in the domestic air cargo segment.

Meanwhile, its high retention rate, acquisition of new customers, and network and capacity expansion, and strong demand from the e-commerce segment provides a solid foundation for outsized growth in the coming years. 

About two-thirds of Cargojet’s domestic revenues have long-term contractual arrangements with CPI-base price annual increases and guaranteed volume minimums. Meanwhile, its cost advantage over peers positions it well to expand its market share and deliver consistent growth. 

Lightspeed POS 

Lightspeed POS (TSX:LSPD)(NYSE:LSPD) is another top stock that could continue to perform well with or without the COVID-19 vaccine. While the pandemic has driven the demand for its digital products that support omnichannel payments and e-commerce, the momentum is likely to sustain even in the post-pandemic world. 

The structural shift from a traditional payments platform towards a cloud-based omnichannel platform has created a multi-year growth opportunity for Lightspeed. Meanwhile, innovation and expansion of its product suite and geographical expansion should accelerate its growth further.  

Besides the strength in its core business, Lightspeed is also likely to benefit from the strategic acquisitions. With a large addressable market and strong competitive positioning, Lightspeed remains well positioned to deliver strong returns in the coming years.  

Lightspeed stock is also looking attractive on the valuation front. Despite the massive recovery rally in its stock, it trades at an EV/sales multiple of 20.7, reflecting a discount of about 39% compared to Shopify 

Bottom line 

Cargojet and Lightspeed are all-weather stocks and could continue to deliver superior returns over the next decade. Both these companies have strong growth catalysts, including secular industry tailwinds, strong competitive positioning, and large addressable markets, which are likely to support the uptrend in their stocks. 

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 Sneha Nahata has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends CARGOJET INC., Shopify, and Shopify. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends KINAXIS INC and Real Matters Inc.

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