The mid-cap universe is definitely worth watching if you consider yourself a value investor who’s shying away from some of the tech scene’s hotter plays. Undoubtedly, the equal-weighed market still seems to be lagging behind the cap-weighed one, at least in the United States. The mega-cap tech plays (at least most of them) pulled it off this earnings season. And as they continue pulling broader U.S. markets to higher highs, questions linger as to how high they can fly as their valuation metrics begin to extend.
The good news is, you don’t have to chase red-hot, mega-cap tech titans after their recent runs. In fact, I think the mid-cap Canadian stocks may have more room to rally as they begin to win the love of Wall and Bay Street once again.
In this piece, we’ll have a closer look at two lesser-known mid-caps (one is lagging and the other is flirting with new all-time highs) that I believe are must-watch TSX stocks for 2024. Without further ado, let’s get into the names.
Badger Infrastructure Solutions
Bader Infrastructure Solutions (TSX: BDGI) — formerly Badger Daylighting — is a non-destructive soil excavation service provider that’s really been heating up since bottoming out in the midpoint of 2023. Since June 2023, the stock has rocketed higher, surging more than 85%. With all-time highs in sight, I view Badger as a mid-cap worth keeping on your watchlist. As shares begin to retreat after the recent run, dip-buyers may just have a chance to punch their ticket to Badger at a slight discount.
As industry dynamics look to improve over the coming years, look for Badger to have its breakout moment. In the meantime, I view shares as quite cheap at 29.27 times trailing price to earnings, given the potential for growth that could be ahead. Sure, soil excavation is a dirty job, but it could prove incredibly lucrative, especially as energy firms look to beef up their spending. All considered, Badger looks good right now, but be ready to buy at lower prices, perhaps closer to the low-$40 range.
Cargojet
Cargojet (TSX: CJT) is another TSX mid-cap that can grow again once it’s done navigating this turbulent macro environment. Like Badger, the stock has been off to the races since stock markets turned a corner last year. Now up over 51% since its October 2023 lows, it seems like the CJT shares are finally lifting off the tarmac, as they move closer to the peak seen in 2020.
Indeed, a cargo airline seems like a far better bet than a passenger airline, given demand for overnight shipping could stay hot as the e-commerce trend looks to pick up where it left off. If rates fall quickly and disposable income has a chance to heal, look for CJT and the rest of the logistics industry to rebound further.
At 27.76 times trailing price to earnings, shares of CJT look pretty fairly priced at $119 and change. That said, if a recession doesn’t hit as hard, look for the cyclical to gain ground at an impressive rate.
