From one angle, the concept of the best mid-cap stocks to buy might appear rather ho-hum if not downright uninteresting. For example, investors seeking maximum return potential (in exchange for risk) may target micro-capitalization plays. On the flip side, those seeking maximum stability (in exchange for growth potential) may target mega-cap enterprises.
Frankly, Goldilocks-like proposals – particularly entities meeting a specific framework like mid-cap stocks with big yields – seem rather boring. By going to the middle of the road, you’re probably not going to be remarkable in any one metric. Instead, you might be decently solid on a holistic level. Still, with myriad uncertainties ahead, including stubbornly high inflation and potential risks of a market slowdown, investors may find utility in staying on the median. If that’s you, below are the top mid-cap stocks to consider.
Kulicke & Soffa (KLIC)
An entity that consistently flies under the radar, Kulicke & Soffa (NASDAQ:KLIC) is a leading provider of semiconductor, LED, and electronic assembly solutions serving the global automotive, consumer, communications, computing, and industrial markets. While KLIC doesn’t generate much interest, it really should. Since the beginning of this year, KLIC gained nearly 25% of its equity value.
Financially, what makes Kulicke one of the best mid-cap stocks to buy centers on its broad strengths. Up top, the company carries a cash-to-debt ratio of 15.68, beating out 74.76% of companies listed in the semiconductor space. As well, it enjoys an Altman Z-Score of 8.49, indicating high stability and a very low risk of imminent bankruptcy. Operationally, the company posts revenue growth and EBITDA growth of 44.2% and 111.2%, respectively, over the past three years. However, the market prices KLIC at only 14.88 times trailing earnings. As a discount to earnings, Kulicke ranks better than 68% of its rivals.
At the moment, KLIC carries a moderate buy rating with a $55 price target. While that only implies less than 3% upside, it’s well off its 2021 high. Thus, there could be some additional upside remaining.
Louisiana-Pacific (LPX)
A leader in high-performance building solutions, Louisiana-Pacific (NYSE:LPX) manufactures engineered wood building products that meet the demands of builders worldwide. Based in Nashville, Tennessee, LP operates 25 plants across the U.S., Canada, China, and Brazil. Should the underlying economy escape recession fears, LPX could be a huge winner. Since the Jan. opener, shares gained 2.5%.
Financially, LP offers a compelling profile for the best mid-cap stocks to buy. Operationally, its three-year revenue growth rate pings at 38.1%, beating out 94.39% of its peers in the construction space. Also, its book growth rate during the same period clocks in at 31.2%, above 93% of rivals. Despite the financial outperformance, the market prices LPX at a lowly multiple of 7.64.
To be fair, I wouldn’t classify LPX as one of the mid-cap stocks with big yields. That said, the underlying entity features a forward yield of 1.58% and a subterranean payout ratio of 23.15%. Lastly, Wall Street analysts peg LPX as a consensus moderate buy. On average, their price target comes in at $67.43, implying nearly 11% upside potential.
Diodes (DIOD)
Headquartered in Plano, Texas, Diodes (NASDAQ:DIOD) delivers high-quality semiconductor products to the world’s leading companies in the consumer electronics, computing, communications, industrial and automotive markets. According to its corporate profile, Diodes leverages its expanded product portfolio of discrete, analog, and mixed-signal products and leading-edge packaging technology to meet customers’ needs. Gaining almost 20% since the beginning of this year, DIOD ranks among the top mid-cap stocks for chart performance.
Even better, the enterprise delivers the goods in the financials. Operationally, its three-year revenue growth rate clocks in at 21.7%, outpacing 73.88% of sector rivals. Also, its free cash flow (FCF) growth rate during the same period is 15.8%, above 61.74% of its peers.
In addition, Diodes features consistent profitability over the past several years. Its trailing-year net margin stands at 16.61%, above 76.14% of the competition. Yet at the same time, DIOD trades at a modest trailing multiple of 12.71. Looking ahead, analysts peg DIOD as a consensus moderate buy. Their average price target lands at $101.67, implying nearly 12% upside potential. Thus, it’s a well-balanced example among the best mid-cap stocks.
Malibu Boats (MBUU)
Based in Loudon, Tennessee, Malibu Boats (NASDAQ:MBUU) is a leading designer, manufacturer, and marketer of a diverse range of recreational powerboats, including performance sport, sterndrive, and outboard boats. On the surface, consumer economy pressures might appear to disqualify MBUU as one of the best mid-cap stocks to buy. However, the widening wealth gap dramatically favors the ultra-rich, the key demo that drives MBUU stock.
Since the beginning of the year, MBUU gained under 2%, which isn’t that great. However, contrarians may have a discounted opportunity with this $1.12-billion market cap company. Specifically, Malibu’s three-year revenue growth rate pings at 21.1%, above 86.81% of its peers. Also, its EBITDA growth rate during the same frame is 27.9%, above 81.54%. Even with that performance, the market only prices MBUU at a forward multiple of 6.21. As a discount to projected earnings, Malibu ranks better than 83.33% of the competition.
Turning to Wall Street, analysts peg MBUU as a consensus strong buy. Their average price target stands at $70.29, implying over 29% upside potential. Thus, it’s surprisingly one of the promising mid-cap stocks to consider.
Atkore (ATKR)
Hailing from Harvey, Illinois, Atkore (NYSE:ATKR) claims to forge a future where its employees, customers, suppliers, shareholders, and communities are built better together. An unusual bit of word salad, Atkore specializes in electrical, safety, and infrastructure solutions. As a broadly relevant idea, ATKR makes for an enticing case for the best mid-cap stocks to buy. Sure enough, since the Jan. opener, shares bounced up more than 10%.
To be sure, Atkore doesn’t provide much excitement. Still, under the context of top mid-cap stocks, it’s well worth consideration. For example, its three-year revenue growth rate clocks in at 30.1%, beating out over 91% of companies in the industrial products sector. During the same period, its EBITDA growth rate prints at 67.2%, above 94.73%.
Atkore also features a trailing-year net margin of 21.54%. Despite its robust financial ink, the market prices ATKR at a forward multiple of 7.34. As a discount to projected earnings, Atkore ranks better than 93.85% of its rivals. Looking to the Street, analysts peg ATKR as a moderate buy. Their average price target comes in at $164, implying almost 30% upside potential.
Monarch Casino & Resort (MCRI)
Headquartered in Reno, Nevada, Monarch Casino & Resort (NASDAQ:MCRI) is dedicated to delivering the ultimate guest experience by providing exceptional services as well as the latest gaming, dining, and hospitality amenities. It claims that its main focus centers on superior guest expectations, resulting in the company aggressively reinvesting in its properties. Since the beginning of this year, MCRI slipped nearly 9%.
Understandably, it’s not the greatest look for the best mid-cap stocks. However, with revenge travel sentiment still relatively strong, Monarch Casino may enjoy a fundamental upside catalyst. On the financial front, Monarch posts a three-year revenue growth rate of 22.3%, outflanking 91.62% of its peers. Also, during the same frame, its EBITDA growth rate impresses at 39.5%, above 88.37%. Importantly, Monarch delivers a consistently profitable business framework. Its net margin comes in at 17.9%, beating out 85% of the competition. Despite these facts, the market only prices MCRI at a modest trailing multiple of 15.59.
Now, no analyst within the past three months has covered MCRI. However, about four months ago, Stifel Nicolaus’ Jeffrey Stantial pegged shares a buy with a $91 price target.
Enerplus (ERF)
One of Canada’s largest independent oil and gas producers, Enerplus (NYSE:ERF) commands longstanding relevance. However, because of deflationary dynamics affecting the hydrocarbon energy sector, Enerplus struggled this year. Since the Jan. opener, ERF gave up 9% of equity value. Nevertheless, if society should fully normalize, traffic volume may come storming back. If so, ERF could be one of the best mid-cap stocks to buy.
Operationally, what makes Enerplus stand out is its robust print. For instance, the company’s three-year revenue growth rate clocks in at 34.2%, above 86.53% of sector rivals. Also, its EBITDA growth rate jumps to 128.7% during the same period. Still, ERF trades at a modest forward multiple of 6.22. As a discount to projected earnings, Enerplus ranks better than over 62% of its competitors.
With a forward yield of 1.49%, it wouldn’t be accurate to label ERF as one of the mid-cap stocks with big yields. Still, it provides passive income along with an ultra-low payout ratio of 7.59%. On a final note, analysts peg ERF as a consensus strong buy. Their average price target lands at $19.83, implying over 34% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.