Millennial investors should embrace risks where it makes sense. That means ensuring that the shot at potential rewards compensates for any added risks you’ll bear over some of the market’s brightest (and safest) blue chips. Undoubtedly, the market gains have been all about mega-cap tech, at least of late, with generative artificial intelligence (AI) technologies resuming their ascent in this new year.
Though we’ve heard some folks calling for a broadening out of the gains to the smaller (think the top mid-cap stocks), investors shouldn’t just wait around for the mega-caps to take a breather while their smaller mid-cap counterparts begin to make up for lost time. Indeed, nothing is stopping both groups from participating in the market rally and the early innings of what seems to be a pretty powerful AI-led bull market.
In this piece, we’ll look at two intriguing mid-cap stocks that look suitable for young millennial investors who want to invest in growth without overpaying by too large a margin. Indeed, Mr. Market may not give the following names nearly as much love as the market’s top tech titans. However, I believe those planning to invest over the next +10 years are poised to do well as each firm looks to flex its muscles in this new AI age.
Without further ado, consider the following two mid-cap plays that are atop my watchlist going into March:
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Cargojet
Cargojet (TSX: CJT) used to be a high flyer for many mid-cap investors looking to cash in on the overnight logistics trend. Though consumer spending has come down amid the past few years of headwinds, I still think it’s a mistake to throw in the towel on Cargojet, which will be ready to run once the economy heats up again.
Despite its cyclicality, I find the firm’s moat as worth paying up for, even amid the recent pick-up in turbulence. The stock goes for around 27.67 times trailing price to earnings — a reasonable and fair price to pay for a firm that could really accelerate its growth once the economy puts its foot on the gas.
With more than 51% in gains since bottoming late last year, I view CJT as nothing short of intriguing. Of all firms with market caps in the $2 billion range, Cargojet seems to have one of the widest moats, and that’s thanks in part to its exceptional managers and pricy fleet of aircraft.
Spin Master
Spin Master (TSX: TOY) is more than just a toy company that’s been hit with consumer-facing headwinds. The company has been innovating, perhaps by enough to move in on the turf of top toy rivals. With a modest $3.5 billion market cap, there’s ample room to grow in an industry that many may be quick to count out at a time like this when consumers are getting stretched by high rates and ongoing layoffs.
With a robust fourth quarter in the books (sales up almost 8%), an innovative pipeline, and the means to continue growing via mergers and acquisitions, TOY stock ought to be on millennial investors’ wishlists going into March 2024. At 16 times trailing price-to-earnings, I’m a big fan of the value to be had in the underrated toy juggernaut. Perhaps it’s worth a spot in one’s Tax-Free Savings Account?
