Mid-cap stocks have the best odds of scaling into $100 billion corporations thanks to their tested business models and large addressable markets. But the many opportunities in front of them attract significant competition, spanning from industry behemoths with seemingly infinite resources to small, nimble players with chips on their shoulders.
These dynamics can rattle even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. Keeping that in mind, here is one mid-cap stock with huge upside potential and two that could be down big.
Two Mid-Cap Stocks to Sell:
Gap (GAP)
Market Cap: $10.29 billion
Operating under the Gap, Old Navy, Banana Republic, and Athleta brands, Gap (NYSE:GAP) is an apparel and accessories retailer selling casual clothing to men, women, and children.
Why Is GAP Not Exciting?
- Products have few die-hard fans as sales have declined by 1.3% annually over the last three years
- Free cash flow margin dropped by 2.2 percentage points over the last year, implying the company became more capital intensive as competition picked up
- Low returns on capital reflect management’s struggle to allocate funds effectively
At $27.40 per share, Gap trades at 12.2x forward P/E. Dive into our free research report to see why there are better opportunities than GAP.
Baxter (BAX)
Market Cap: $10.18 billion
With a history dating back to 1931 and products used in over 100 countries, Baxter International (NYSE:BAX) provides essential healthcare products including dialysis therapies, IV solutions, infusion systems, surgical products, and patient monitoring technologies to hospitals and clinics worldwide.
Why Do We Avoid BAX?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Earnings per share fell by 6% annually over the last five years while its revenue was flat, showing each sale was less profitable
- Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
Baxter’s stock price of $19.83 implies a valuation ratio of 9.8x forward P/E. Check out our free in-depth research report to learn more about why BAX doesn’t pass our bar.
One Mid-Cap Stock to Watch:
The Ensign Group (ENSG)
Market Cap: $12.3 billion
Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ:ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.
Why Does ENSG Catch Our Eye?
- Market share will likely rise over the next 12 months as its expected revenue growth of 18.3% is robust
- Earnings per share grew by 13.8% annually over the last five years, massively outpacing its peers
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
The Ensign Group is trading at $214.15 per share, or 28.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.