- The best mid-cap stocks to buy provide growth potential without being overly speculative.
- PDC Energy (PDCE): With oil prices likely to soar on reduced global supply, PDCE can still build on its momentum.
- Life Storage (LSI): Housing market dynamics could make this self-storage-focused real estate investment trust thrive.
- Oshkosh (OSK): Specialty truck and military vehicle maker OSK could be one of the best mid-cap stocks to buy on escalating tensions.
- Boyd Gaming (BYD): A gaming and hospitality firm, Boyd could benefit from broader travel desires.
- Williams-Sonoma (WSM): WSM caters to a more affluent crowd, thus providing some economic insulation.
- Lithia Motors (LAD): LAD has held up well because of the indispensable demand for personal transportation.
- Avis Budget (CAR): Avis could benefit from heightened domestic travel demand.
During this discounted period, it may be tempting to sniff out some popular small-capitalization trades. However, patient investors should consider the best mid-cap stocks to buy.
Understandably, the middle-of-the-ground approach might not appeal to certain folks, depending on their age bracket. As many publications have revealed, young investors tend to have an all-or-nothing approach to some of the sexiest names available.
But when things go sour — which they invariably do — you’ll want to have the best mid-cap stocks in your portfolio.
That’s because a balanced methodology can often give you a sample of different attributes across the investing spectrum. With the best mid-cap stocks to buy, you may be able to enjoy the upside energy of the smaller enterprises with the stability of established businesses.
Given the uncertainties of the market and the wider economy, staying in the middle lane could be the smartest move.
PDC Energy (PDCE)
Independent oil and gas company PDC Energy (NASDAQ:PDCE) seems a smart bet with crude oil prices set to surge higher.
During a market downfall, it may seem counter-intuitive to seek out stocks that are enjoying impressive upside returns. The concern is that every hot company will plunge into the abyss eventually.
In fairness, many experts suggest that the cure for higher prices is higher prices, meaning that at some point, the market will no longer be able to sustain extreme valuations and force a decline. However, people need energy to survive. As much as folks love waxing poetic about electric vehicles, this transition won’t happen overnight.
Furthermore, global supply chain issues and production challenges may prevent higher supply counts, thus increasing demand. So, PDCE seems a logical choice for the foreseeable future.
Life Storage (LSI)
Real-estate investment trust (REIT) Life Storage (NYSE:LSI), has been an intriguing name. The company specializes in self-storage properties.
Before the pandemic, many baby boomers either in or facing retirement began downsizing, which then increased demand for the storage industry. Retirees wanted a place to store their belongings without the burden of an unnecessarily large home.
Post-pandemic, the situation for LSI is tricky making it a binary affair: it’s either going to be a boom or bust.
On the less-than-optimistic side, there might be a reason for shares dropping 20% so far this year other than technical dynamics. With the soaring inflation rate, now is not the time for extraneous purchases such as storage rentals.
On the other hand, should real-estate prices decline, buyers on the sideline could swoop in. That might bolster Life Storage as a transitioning platform.
Known for its highly specialized vehicles for commercial and military applications, Oshkosh (NYSE:OSK) plays a vital role in our infrastructure.
It facilitates military mobility, helping the armed forces achieve their mission. Its underlying resilience is presumably one of the reasons why the U.S. Postal Service chose it for manufacturing next-generation mail carriers.
Despite this importance to our economy, Oshkosh has not been spared the crimson ink rippling throughout the market. OSK is down more than 18% year to date. It’s shed nearly 30% in the last year. Still, geopolitical rumblings could make OSK rather interesting.
From Russia’s invasion of Ukraine to President Joe Biden’s shocking admission that he will actively defend Taiwan against possible Chinese aggression, the world is rapidly becoming a dangerous place. Such instability is a playground for defense trades, making OSK one of the best mid-cap stocks to buy.
Boyd Gaming (BYD)
On paper, hospitality and gambling play Boyd Gaming (NYSE:BYD) should be a rough idea to consider.
Inflation (and its resultant loss of purchasing power) imposes a significant headwind on household budgets. You’d assume that people would rather stay home and save money.
Indeed, BYD is in negative territory this year, having declined about 11.5% since the beginning of January. But here’s the thing: the benchmark S&P 500 is down 16% during the same period, suggesting comparative strength for Boyd.
If you want to read into it, you could make the argument that the past two years of pandemic-related lockdowns and mitigation measures have created pent-up demand for social experiences.
Interestingly, BYD appears to be forming a long-term bullish flag formation, starting from the spring doldrums of 2020. I’m not about to make guarantees, but BYD could be one of the best mid-cap stocks to buy.
High-end retailer Williams-Sonoma (NYSE:WSM) has been getting beaten up along with the big-box retailer segment. WSM finds itself down nearly 23% year to date.
Wall Street analysts have been worried this year that even affluent customers will start to penny-pinch. Of course, that wouldn’t be a favorable outcome for Williams-Sonoma.
However, the flip side is that the company caters to a more sophisticated consumer base, featuring an average household income of $100,000. If recent data is anything to go by, though (WSM stock popped 22% last week) it’s one of the best mid-cap stocks to buy for contrarians.
Lithia Motors (LAD)
Nationwide car dealership group Lithia Motors (NYSE:LAD) has had a rocky year so far, but it still has returned nearly 3% in a declining market.
The thing is, the retail automotive industry could be due for a sharp correction soon. It’s just not possible for cars, whether new or used, to keep rising in price.
By that thinking, LAD makes more of a short target than a buy.
However, bullish contrarians should keep LAD on their radar. While consumers are cutting back on discretionary items, personal transportation expenditures are almost impossible to avoid.
For one thing, most people (pre-pandemic) drove to work alone. Second, the whopping average age of vehicles on U.S. roadways hit a record 12.2 years.
When these old cars invariably break down, it may make more economic sense to replace them rather than repair them. Therefore, Lithia is in a prime position to benefit.
Avis Budget (CAR)
Avis Budget (NASDAQ:CAR) might be due for a severe correction.
An elevated profile could mean vulnerability to downside should economic conditions fail to improve. Certainly, rising inflation will convince many folks to stay at home.
However, vacationing appears headed for a comeback this year. so CAR could swing higher based on increased domestic travel demand.
This is an important point because popular international destinations are closed off. Want to go to China? Not a great idea right now. Eastern Europe is also a no-go, as are other places like Japan. Therefore, domestic travel is the safest, most sensible choice, perhaps making CAR a buy.
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.