Mid-cap companies have higher growth potential compared to large-cap companies and are less risky than small-cap companies. So, given the best of both ends, these companies are an excellent addition to your portfolio. Meanwhile, let’s look at four top mid-cap stocks that you can buy right now to earn superior returns.
My first pick would be Docebo (TSX:DCBO)(NASDAQ:DCBO), which provides customized learning management solutions (LMS) to various organizations across industries. With more businesses adopting digital tools to upskill their employees, the LMS market is growing at a healthier rate. Meanwhile, the company projects the LMS market to grow at a compound annual growth rate (CAGR) of 21% over the next five years.
Further, Docebo is launching innovative products and expanding its geographical presence to expand its customer base and drive its average contract value. It recently opened a new office in Munich, Germany to strengthen its competitive position in the European market. Also, it added three new OEMs to its customer base earlier this month. Besides, the company earns around 93% of its revenue from recurring sources, which is encouraging. So, given the favourable market conditions and its growth initiatives, I expect the rally in Docebo’s stock price to continue.
Air Canada (TSX:AC) is trading at a significant discount from its pre-pandemic levels amid the grounding of its aircraft due to travel restrictions. The selloff has dragged its forward price-to-sales trades to an attractive level of 0.7. Meanwhile, the easing of travel restrictions has allowed the company to resume its service to several destinations worldwide.
The relaxation of harsh travel restrictions and the pent-up demand could boost passenger demand in the coming quarters. The company is also strengthening its cargo division by adding retired passenger aircraft amid rising demand. Along with these initiatives, its cost-cutting initiatives could boost its financials. Further, with its liquidity standing at $9.8 billion as of June 30, the company is well-equipped to sail through this crisis and deliver superior returns over the next three years.
TransAlta Renewables (TSX:RNW) could also be an excellent addition to your portfolio. It currently operates or has an economic interest in over 45 facilities that can produce 2.5 gigawatts of power. Its cash flows are stable primarily due to its long-term power sales agreements that shield its financials from price and volume fluctuations.
Further, TransAlta Renewables has around 2.9 gigawatts of power-producing facilities in the construction or evaluation stage. Along with organic growth, it also focuses on acquisitions to drive its growth. Earlier this month, the company had signed an agreement to acquire several solar facilities, increasing its power-producing capacity by 122 megawatts. So, its growth prospects look healthy. The company rewards its shareholders by paying a monthly dividend of $0.07833 per share, with its forward yield currently standing at 4.72%.
BlackBerry (TSX:BB)(NYSE:BB) had a very volatile year, with its stock price fluctuating from $36 on the higher side to $8.34 on the lower side. Currently, it is trading at a 63.2% discount from its recent highs. Despite its volatility, I am bullish on the stock due to its healthy growth prospects. Meanwhile, modern vehicles have various components produced from different OEMs that produce data in different formats, thus creating challenges for product developers. However, BlackBerry’s IVY platform hopes to solve these problems by standardizing data points, thus allowing developers to create products that are compatible across multiple brands.
BlackBerry also focuses on strengthening its position in the growing EV market and could benefit from rising software components in vehicles. Further, the growth in remote working and learning has increased the spending on cyber security, benefiting the company.
Meanwhile, it has strengthened its position in the endpoint security market by expanding its product offerings with the launch of BlackBerry Optics 3.0, BlackBerry Gateway, and BlackBerry Jarvis 2.0. So, I believe investors should utilize the correction to accumulate the 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.
The Motley Fool owns shares of and recommends Docebo Inc. The Motley Fool recommends BlackBerry. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.