It’s a word you used to hear a lot about when it came to building a strong portfolio. But the thing is, trends change and all sorts of stories get written about income and/or growth being the bedrock of portfolios.
In the height of the dotcom boom, brokers were telling their clients that growth was the new income and that those stupid income stocks were an anchor on their portfolio. Now, tech, e-commerce, and cannabis rule the day. But you need more than just those headline sectors in your portfolio.
That’s where mid-cap stocks come in. They are well suited for moderate growth markets like we’re in now, because they can show more growth than lumbering large-cap stocks. They also offer more safety than small-caps.
These are ‘Goldilocks’ stocks that are worth a place in your portfolio. Below are seven ideal mid-cap stocks for a diverse portfolio. And they’re all A-rated in my Portfolio Grader.
It’s certainly a shadow of its former self, but it has retooled and shifted away from its U.S. base into developing markets where access to health and beauty products is more of a challenge.
This was part of its allure in the U.S., when more of America was rural and getting a decent selection of beauty products was hard to come by on a regular basis. It was the same concept as the Sears catalog – it brought the store to you, but it involved having a real-life professional show you how to use the products – a makeup counter in your own home.
This strategy has been working. And the cosmetics industry is predicted to boom in coming years.
The stock is up a whopping 231% in the past year, so there are a lot of believers. In its latest quarter, profits were up but revenue missed slightly.
Carlyle Group (NYSE:CG) is essentially a private equity firm. Before (and after) it went public, it was the place where the Saudi royal family, the Bush family and other old money groups put some of their money in to diversify their portfolios beyond stocks and bonds.
It was a very exclusive club. But then it opened up and started to wade into the water with other private equity firms. Now it owns real estate, buys into companies as turnaround plays, offers financing, etc.
CG still a quiet company that has a very good track record. And even after running up 95% in the past year, the stock is only trading at a trailing PE under 11 and still delivers a solid 4.4% dividend.
There are certainly bigger names in this game, but CG’s client list makes them a very interesting choice if you want to dip your toe into the growing private equity sector.
China Biologic Products (NASDAQ:CBPO) has been on my radar for many years. So it wasn’t a surprise when a consortium came in and bought the company for $4 billion.
When it started, CBPO was a solid medical company that focused on the boring end of drug development – plasma-based biopharmaceutical products for immune system disorders, epidemic diseases, and disaster relief medicines.
Basically, it was making front line drugs for a developing economy. In China, that’s a lot of business potential. And CBPO was one of the favorites of the government in the space.
That means it gets the research grants and orders from the government. As a result, it went from a penny stock to a mid-cap stock literally overnight.
It still has plenty of growth left in it, because these are precisely the kind of medical companies that China wants to build.
ManTech International (NASDAQ:MANT) is an IT and technical services firm that works primarily in the defense sector. This is a very good place to be now.
As we modernize the theater of war, it takes an extreme amount of technical support. Think about a networked battlefield with soldiers with heads-up display relaying information to other soldiers, equipment that locate where shots are coming from and calculate countermeasures, drones offering up images of potential combatants and non-combatants – all in real time.
And then you have secure communications for covert operations and systems for intelligence services. This is all where MANT makes it business.
The defense sector and intel services are very focused on electronic warfare. Money was put into the budget for a new space force as well. You can be sure that MANT is in the middle of all these new contracts.
The stock is up nearly 47% this year, yet it still trades at a trailing PE of 30. This is a good time to be a secure tech provider for defense and intel agencies.
Aqua America (NYSE:WTR) is one of the leading water companies east of the Rockies. It operates in Ohio, Texas, Illinois, North Carolina, Virginia, New Jersey and Indiana.
Basically, as municipalities struggle to keep up to date on their water systems, they turn to companies like WTR to do it for them. Many older towns have outdated systems that need to be upgraded to current standards, pipes and pumps need to be replaced, and wastewater systems upgraded.
WTR has the advantage of economies of scale and focused expertise. It has everything it needs on hand and do much of the work and maintenance cheaper than the towns can do it.
It’s a good business that works out for everyone. Residents get a value for their tax dollars and reliable drinking water, and companies gets long-term contracts.
The stock is richly valued here, but the expectation is that WTR is in a growth phase now, so that shouldn’t be an issue for long. Also, it has a rock-solid 2% dividend that adds to its allure.
Vipshop Holdings (NYSE:VIPS) is a Chinese e-commerce fashion retailer. Think of it as a Chinese version of Macy’s (NYSE:M), but without the challenges of brick and mortar stores, or the loss of its brand power to emerging brands.
VIPS is the emerging brand and it has a variety of products at all price points. In this way, it’s also like a Chinese Amazon (NASDAQ:AMZN) of fashion for women, men and children.
VIPS has come a long way in its 11 years. It has an $8 billion market cap now and the stock is up 163% in the past year. Remember, the U.S.-China trade war has been going on 18 months.
The trade war has likely helped VIPS since it wasn’t raising prices because of U.S. imports. It likely built an even bigger footprint for itself moving forward since it gained customers over that time. And now that the Chinese economy is on the mend, that means even more growth.
Kinross Gold (NYSE:KGC) is one of the bigger gold and silver mining players in the world. It’s headquartered in Toronto, Canada but has mines all over the world, generally buying up smaller mines and adding them to its family.
While gold may seem a bit antiquated an investment, the fact is, a good gold company is always a good hedge. When the markets are in turmoil or inflation starts to rise, gold rises in demand.
And countries around the world still stockpile gold when they see market troubles.
Also, silver is an industrial metal as well as a precious one. It’s a crucial metal in a lot of high-performance electronics, so demand for silver can grow as demand for electronics expands.
Miners don’t follow the price of gold directly; they usually underperform when gold is weak and outperform when gold prices are strong. For example, gold is up 14% year to date but KGC is up 40%. This is neither good or bad, but it’s good to know if you haven’t owned a mining stock before.
Again, this is a good hedge at a good time. It shouldn’t be a major holding.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.