Midcap stocks are the companies that will have a market capitalization between $2 billion and $10 billion. Usually, these companies will have passed the initial start-up phase, thus making them less riskier than small-cap stocks. Further, these companies offer higher growth prospects than large-cap stocks, thus delivering superior returns in the long run. Meanwhile, here are three top mid-cap stocks that I am bullish on right now.
Docebo
Docebo (TSX:DCBO) has been witnessing healthy buying since the beginning of November, with its stock price rising 14.8%. The e-learning platform provider reported an impressive third-quarter performance in November, with its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growing by 26% and 9.7%, respectively. An expanding customer base and higher average contract value drove its financials. It also generated a free cash flow of $8.4 million during the quarter.
Meanwhile, the demand for e-learning platforms is rising amid remote learning and working. The company focuses on developing new features to meet customers’ needs. In the first three quarters, it has introduced 90 new features and capabilities, which will support its growth in the coming quarters. The acquisition of Edugo.AI in June has enhanced its existing AI (artificial intelligence) capabilities and strengthened its platform’s capabilities. Considering all these factors, Docebo would be an excellent buy at these levels.
Nuvei
Nuvei (TSX:NVEI) is another mid-cap stock worth adding to your portfolio due to its solid underlying business and high-growth prospects. The digital payment processing company focuses on developing modular, flexible, and highly responsive products to meet the evolving needs of its clients. The company is venturing into new markets and expanding its APM (alternative payment methods) portfolio to expand its market share and drive growth.
Nuvei recently opened a new office in Shanghai, China, to strengthen its position in the Asia-Pacific region. Amid the growing addressable market and its growth initiatives, the company’s management is confident of growing its topline at an annualized rate of 15-20% in the medium term. Amid its disciplined cost management and improving efficiencies, the company is optimistic about increasing its adjusted EBITDA margin above 50% in the long term. It trades at an NTM (next 12-month) price-to-earnings multiple of 11.8, making it an attractive buy.
Kinaxis
Kinaxis (TSX:KXS) has also outperformed the broader equity markets, with its stock increasing 14% since the beginning of November. The supply management solutions provider posted an excellent third-quarter performance last month, with its revenue and adjusted EBITDA growing by 21% and 54%, respectively. The strong performances from its professional services, SaaS (software as a service), and maintenance and support segments more than offset a decline in revenue from the subscriptions and licenses segment to drive its financials.
The demand for supply chain management solutions remains solid, creating a multi-year growth potential for the company. Meanwhile, Kinaxis is making strategic investments to strengthen its market share. The company’s management has raised its 2023 guidance amid its solid third-quarter performance. Now, the company’s management projects its revenue to be between $425 million and $435 million, with the midpoint representing a 17.2% growth from the previous year. Despite the recent increases, the company still trades over 19% lower than its 52-week high. So, considering all these factors, I believe Kinaxis offers a solid entry point for long-term investors at these levels.
