After a year-long market selloff, investors should always be on the hunt for a bargain. In the mid-cap universe, there are many hidden gems that may be worth watching. Indeed, the mid-cap stocks tend to be a more volatile ride than large-caps or mega-caps. That said, they tend to boast growth rates that are more impressive on average.
Investors should put in the extra due diligence when searching for bargains among the mid-caps. They tend to exhibit huge moves in both directions. For investors brave enough to step in, though, the mid-caps are more than worth your time and attention, especially if you seek to hang onto an investment for many years.
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TSX mid-cap hidden gems worth consideration in 2023
Remember, the longer you plan to hold an investment, the lower your chances will be realize a large loss. A long-term horizon alone isn’t enough to justify punching your ticket to a mid-cap stock, though. In this piece, we’ll have a closer look at two interesting TSX stocks that may be worthy of your attention as we move ever so closer to the early stages of the next bull market.
Of course, it’s too early to say if we are on the cusp of a new bull. That said, the S&P 500 bear market is getting older by the day. Eventually, the bear will need to go back into hibernation, leaving the bull with room to move to the upside. In such a scenario, various undervalued mid-cap stocks could be in a spot to give you the biggest bang for your buck.
Without further ado, consider shares of Badger Infrastructure Solutions (TSX: BDGI) and Aritzia (TSX: ATZ).
Badger Infrastructure Solutions
Badger is one of the mid-cap businesses that doesn’t get too much attention. Given the ugly chart, the infrastructure play is definitely forgettable. Shares are down around 40% off their five-year highs. And with a lack of momentum behind it, Badger stock seems very much like dead money.
Though Badger had experienced turbulence, I think value investors have a lot to love about the name at under $30 per share. The hydrovac excavation service provider expects to release its first-quarter (Q1) 2023 results on May 3, 2023. Expectations seem quite modest, especially after a turbulent past year.
The stock trades at 1.82 times price to sales and 18.94 times forward price to earnings. With a 2.21% dividend yield and a lot of runway to recover, I’d not be afraid of the Badger going into earnings season. It’s a great bargain with somewhat muted expectations.
Aritzia
Aritzia is a woman’s clothing company that’s really impressed over the years. The $4.75 billion retail firm is up around 250% over the past five years. Though momentum has slowed in the face of a challenged consumer, I still think the recent dip (down 28% off all-time highs) is buyable.
The company’s U.S. expansion could bolster earnings growth over time. Further, the firm has thrived on the direct-to-consumer (DTC) front. At 27.27 times trailing price to earnings, I view ATZ stock as a mid-cap growth gem to keep a close watch on, even as the recession inches closer.
