Mid-cap stocks will have a market capitalization between $2 billion and $10 billion. These companies will have usually passed the volatile start-up phase but possess substantial growth prospects. Therefore, these companies are more stable than small-cap stocks while offering higher growth prospects compared to large-cap stocks, thereby making them attractive to investors who would like to balance between risk and reward. Against this backdrop, let’s look at my three top Canadian mid-cap picks.
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goeasy
goeasy (TSX:GSY) is a Mississauga-based company that offers a full range of financial services to subprime Canadians. Supported by its solid quarterly performances and expanding loan portfolio, the company has outperformed the broader equity markets this year, with its stock price rising around 14% year to date. Supported by its scale and diversified lending model, the company grew its loan portfolio to over $5 billion as of June 12, an addition of around $1 billion over the last 12 months. Along with these expansions, its improving net charge-off rate and efficiency ratio could support its financial growth in the coming quarters.
Moreover, goeasy’s management projects its loan portfolio to come between $7.35 billion and $7.75 billion, with the midpoint of the guidance representing a 51% increase from its June levels. Amid these expansions, the company’s management expects its revenue to grow at an annualized rate of 11.3% through 2027. Also, its operating margin could improve to 43% by 2027, while delivering a yearly return on equity of around 23%. Further, the company has raised its dividend for 11 consecutive years at an annualized rate of 29%, while its forward dividend yield stands at 3.13%. Its valuation also looks reasonable, with its NTM (next-12-month) price-to-earnings multiple at 9.8, making it an excellent long-term buy.
Northland Power
Northland Power (TSX:NPI) owns and operates diversified energy infrastructure assets with economic interest in 3.2 gigawatts of power-producing facilities. Meanwhile, the company sells most of the power produced from these facilities through long-term PPAs (power-purchase agreements), thereby shielding against price fluctuations and delivering predictable cash flows. The weighted average contractual revenue life of these contracts stands at around 15 years.
Moreover, Northland Power has around 2.2 gigawatts of power-producing facilities under construction and expects to raise its total power-producing capacity to six gigawatts by 2027. Amid these expansions, the company’s management expects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in 2027 to come between $1.6-$1.8 billion, representing an annualized growth of 9.4%. Despite its healthy growth prospects, the company trades at an attractive NTM price-to-earnings multiple of 15.1, making it an attractive long-term buy. Also, it offers a monthly dividend, with its forward dividend yield at 5.31% as of the August 5th closing price.
Maple Leaf Foods
My final pick is Maple Leaf Foods (TSX:MFI), a consumer-packaged meat company that offers food products under various brands across Canada, the United States, Japan, and China. Supported by its solid quarterly performances and continued initiatives to separate its pork business into a standalone company, the company has delivered impressive returns of over 45% this year, outperforming the broader equity markets.
Meanwhile, MFI continues to invest in innovation, marketing, and advertising to drive consumer demand. Furthermore, its strategic initiatives to expand its presence in the United States and solidify its position in the sustainable meat sector may contribute to financial growth in the upcoming quarters. Amid these growth initiatives, MFI projects its 2025 top line to grow in the mid-single digits, while its adjusted EBITDA could increase 14.6% to $634 million. Also, its NTM price-to-earnings multiple stands at an attractive 16, making it an excellent long-term buy.
