The U.S. unemployment rate fell to 4.4% in April according to the U.S. Labor Department’s release today. That is good news for a sector of the market the has been waiting for consistently good news for a while now — mid-cap stocks.
You see, when the economy is expanding mid-caps are the big beneficiaries because they can scale up faster than large caps and they can expand their growth wider than small-cap businesses. In a healthy recovery they are a great choice.
Now looks like a good time to add some to your portfolio, while they’re still relatively cheap and the herd hasn’t picked up on the trend yet. The good thing about these seven mid-caps stocks to buy for “sweet spot” returns is, they’ll be winners even if the economy doesn’t soar immediately.
Mid-Cap Stocks to Buy: Advanced Energy (AEIS)
Advanced Energy Industries Inc (NASDAQ:AEIS) doesn’t make semiconductors, it makes the parts that make them work better. It doesn’t make photovoltaic cells, it makes the parts that make them more efficient.
AEIS produces power conversion, measurement and control solutions to a number of key industries. And as their boats rise, so will AEIS stock.
During the economic malaise, AEIS kept plugging along but wasn’t really hitting it out of the park. Most of its markets were tepid and it was doing a good job just keeping its head above water. But that’s beginning to change.
The recent earnings release for the first quarter shows that revenue was up 45% for the quarter versus the same quarter last year. Its revenue was up 10% in sequential quarters. It has focused its business on the semiconductor, precision materials, industrial energy and renewable energy sectors and with their revival, AEIS is coming back.
Up nearly 60% in the past six months, AEIS is on a long-term run.
Mid-Cap Stocks to Buy: Cirrus Logic (CRUS)
Cirrus Logic, Inc. (NASDAQ:CRUS) has been focused on one key tech sector since its beginnings in 1984 — audio and voice signal processing. I’m sure that back then no one knew how big this technology would become or how crucial to our everyday lives it would be.
CRUS is split into two divisions, Portable Audio and Non-Portable Audio. Earlier this week CRUS reported its Q4 and FY17 earnings and it beat on both revenue and earnings expectations.
According to CRUS, it derived 85% of its revenue from Apple Inc (NASDAQ: AAPL). At this point, that is a very encouraging relationship, as Apple prepares to launch the iPhone 8 at a big 10-year iPhone anniversary event this fall.
Apple reported slow sales in the last quarter, but many believe that’s simply because people are waiting for the release of the iPhone 8 later this year. Up 14% in the past three months, CRUS could have a very big Q3 and Q4 to get things moving even faster.
Mid-Cap Stocks to Buy: MKS Instruments (MKSI)
MKS Instruments, Inc. (NASDAQ:MKSI) is one of those companies that is quietly behind the scenes of some of the most important tech sectors. And its recent returns show that there is life coming back into the cheeks of the economy.
MKSI makes instruments, subsystems and process control solutions that measure, control, power, monitor and analyze the processes that its clients manage. And given its broad array of clients – environmental monitoring, defense and security, life sciences, industrial manufacturing and thin film industries – it’s very likely you have been introduced to its technology without even knowing it.
And the numbers show its recent growth. Total revenue for Q1 is up 33% from the same quarter last year. Net income was up almost 50% over the same period. And margins are continuing to grow. It’s no wonder MKSI is up 20% in the past month. And as the economy improves these numbers will only get better.
Mid-Cap Stocks to Buy: Apollo Global Management (APO)
Apollo Global Management LLC (NYSE:APO) is an alternative investment management company, specializing in private equity, credit and real estate with a specific focus on distressed assets.
Basically, that means APO will look for good opportunities where companies are struggling. It will buy them cheap, clean them up and either sell them, take them public or merge them into existing operations.
For example, a big non-mortgage bank in Canada, Home Capital Group Inc (TSE:HCG), is currently struggling to stay in business because of a poorly executed announcement from the Canadian securities commission. APO is on the scene, seeing if there’s a possibility it might be able to help recapitalize the bank and take a controlling interest in it at the same time.
It does the same with businesses, developers and corporate debt all around the world. This is a very good business when an economic transition is underway.
The stock is up nearly 50% in the past six months and it still throws off a huge 6.3% dividend yield.
Mid-Cap Stocks to Buy: Momo (MOMO)
Momo Inc (ADR) (NASDAQ:MOMO) is a Chinese social media firm. In China, millions of people move to various cities from the surrounding countryside every year. Many of them are young people looking for opportunities in the big cities.
According to The Guardian, there are more than 100 cities in China with populations over 1 million people. There are five cities that have over 20 million. In the U.S., there are just 10 cities with a population over 1 million. And the biggest city in the U.S. has a population under 10 million.
MOMO has built a location-based social networking app that allows people to connect that live in the same place. It started as a dating app, but has expanded its scope and is now one of the most popular social media apps in China.
MOMO allows these young newcomers to meet and get together, either socially or romantically, on and offline. MOMO sponsors live concerts for people to attend as well as have them live-streamed on its app. Year-to-date, the stock is up 110% and it is just hitting its stride.
Mid-Cap Stocks to Buy: TAL Education Group (TAL)
TAL Education Group (ADR) (NYSE:TAL) is an after-school tutoring company focusing on primary and secondary school students. Education is an increasingly important aspect of Chinese life, now that the economy is moving from an agrarian base to a technology-oriented capitalist economy. And considering the amount of people in the country, getting into good schools is very competitive.
Tomorrow Advancing Life specializes in education through science and technology, basically what we would term a STEM (science, technology, engineering and mathematics) education. This is the foundation for the next generation of scientists, engineers and programmers and China is very eager to build up its homegrown tech workforce.
In the latest quarter, reported in late April, TAL revenue was up 80% over the past year. Earnings also came in above expectations. TAL is up 70% year to date. Growth isn’t coming; it’s already here, with plenty more to come.
Mid-Cap Stocks to Buy: TriNet (TNET)
TriNet Group Inc (NASDAQ:TNET) is one of those “interesting” 21st century companies. It specializes in full-service human resources solutions for small and medium sized businesses.
Since the great reckoning of 2008, many businesses have been looking for ways to thin costs to stay in business while remaining competitive. Outsourcing has been the biggest winner in that effort.
When the economy was on the skids, small and medium-sized businesses felt the pain the most. It was hard to get loans; business was slow; so technology became the best solution. Cut fixed costs and outsource whatever you could.
TNET had a compelling product that was scalable and could be deployed across the U.S. You can buy an entire package of HR solutions or just the ones your company needs.
Now that the economy is growing again, small and mid-sized firms won’t go back to building an HR department, they’ll stick with TNET and use more of its services and growth demands. This is why the stock is up almost 30% in the past three months. As the recovery continues, so will the success of TNET.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.