2 Mid-Cap Stocks That Could Lead Markets Higher in 2024

Badger Infrastructure Solutions (TSX:BDGI) and another mid-cap stock that’s full of long-term growth potential.

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More than a handful of mid-cap stocks have been lagging in recent years, in the face of higher rates and a bleaker economic outlook. Though the mid-caps tend to be a choppier ride, beginner investors should still consider them as part of a diversified portfolio, given they may provide one with a better shot at outsized rewards. It’s far easier to double in size as a $3 billion company than it is for a $1 trillion company, given the immense room to grow market share.

For me, the mid-cap sweet spot tends to lie in the $1–5 billion range. Just because volatility is elevated relative to your average blue chip (at least in normal market conditions) does not mean they’re riskier. In some instances, mid-cap stocks may be a less risky pick than a mega-cap. It all comes down to the price you’ll pay and the width of the moats in the individual companies.

In this piece, we’ll check out two mid-cap stocks that I think could lead the way for the TSX Index going into the new year (and beyond).

Jamieson Wellness

Jamieson Wellness (TSX:JWEL) is an easy mid-cap ($1.2 billion market cap) to dismiss or overlook. The firm is in the boring business of vitamins, minerals, and supplements — a pretty commoditized industry. As one of the oldest mid-cap companies out there, though, its moat lies in its brand. It’s this brand that has allowed it to gain an edge over rivals in the ultra-competitive wellness and supplements scene.

The stock seems to be rebounding from its more than two-year funk, blasting nearly 33% off its October lows. I believe these gains are sustainable and could be the start of a move towards new highs. Though shares don’t look as cheap at 26.6 times trailing price-to-earnings, I do think JWEL’s growth runway (think of the growth possibilities in Asia) makes it worth a much higher price tag than is being offered today.

With a nice 2.6% dividend yield and a business that could withstand a coming recession, I’d not shy away from the name if you seek a multi-year growth darling to hold for the long haul.

Badger Infrastructure Solutions

Badger Infrastructure Solutions (TSX:BDGI), formerly Badger Daylighting, is in the niche business of mobile hydrovac soil excavation. In essence, the firm offers non-destructive excavation services for a wide range of firms. Many clients in the energy industry need Badger to dig up buried assets without damaging them.

In recent years, Badger has been on a wild ride. More recently, Badger has been climbing higher, thanks in part to strong quarterly results. Year to date, BDGI stock is up around 50%. That’s a huge climb for a firm that’s hibernated for quite a while. As the industry landscape (and Badger’s margins) looks to improve from here, I’d look for the stock to add to its recent gains. At 27.7 times trailing price-to-earnings, Badger still doesn’t look absurdly expensive as the fundamentals improve.

The Foolish bottom line

Mid-cap stocks can be promising plays for younger investors who are willing to stomach more volatility for a shot at better results over the longer haul. Jamieson and Badger are two mid-cap plays with a lot of potential and room to run.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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