- With the headline equities taking a beating, these mid-cap stocks feature a compelling mix of discretion and upside potential.
- Murphy USA (MUSA): Because gasoline prices are likely to swing higher throughout the year, MUSA seems poised for a big break out.
- National Fuel Gas (NFG): A diversified natural gas distribution firm, National Fuel Gas may enjoy cynical upside.
- Grocery Outlet (GO): Following a strong earnings report, Grocery Outlet’s future looks bright due to its immensely relevant business.
- Olin (OLN): With President Joe Biden’s administration eyeballing firearms regulations, ammo maker Olin commands a cynical catalyst among mid-cap stocks.
- ManpowerGroup (MAN): One of the biggest staffing agencies in the world, MAN is supremely relevant as things get tough in the economy.
- Ollie’s Bargain Outlet (OLLI): With economic concerns weighing on consumer sentiment, OLLI could pick back up following a rough cycle.
- Yelp (YELP): One of the more speculative ideas among mid-cap stocks, Yelp could enjoy more demand as consumers become extra careful with their expenditures.
To be completely upfront with the audience, I had a different idea about what I was going to discuss regarding publicly traded middle-capitalization companies prior to the implosion of the equities sector. Nevertheless, not every asset class has grinded to a halt. Indeed, mid-cap stocks may provide an intriguing role for your portfolio as we all attempt to navigate these rough waters.
Primarily, mid-cap stocks offer a distinct balance between growth and stability. You might even call it the Goldilocks principle for the equities market, with opportunities in this space being neither too hot nor too cold. In other words, these ideas aren’t utterly speculative fare yet are small enough to offer significant upside.
On a related note, mid-cap stocks have a tendency of flying under the radar. During bullish cycles, mid-caps might not receive the fullest allocation of mainstream attention as blue chips. On the other hand, when the smelly stuff hits the proverbial fan, diving down and beneath the flak may allow these balanced ideas to survive and potentially thrive.
If you’re ready to be adventurous without going too far off the deep end, here are some mid-cap stocks to consider.
|MUSA||Murphy USA Inc.||$256.49|
|NFG||National Fuel Gas Company||$68.34|
|GO||Grocery Outlet Holding Corp.||$35.97|
|OLLI||Ollie’s Bargain Outlet Holdings, Inc.||$46.53|
Mid-Cap Stocks to Buy: Murphy USA (MUSA)
Since time is money during these turbulent market cycles, let’s not waste any unnecessary verbiage and get down to the brass tacks. As an operator of a chain of retail gasoline stations, Murphy USA (NYSE:MUSA) is incredibly relevant. One of the best performers among mid-cap stocks listed on S&P Midcap 400 index, MUSA has been killing it, gaining 28% on a year-to-date basis.
Recession fears? Not with Murphy USA and that’s because it levers arguably the most cynical argument ever for mid-cap stocks or any investment category. The national average gas price jumped to a record recently. If that wasn’t discouraging enough, many experts believe that costs will keep rising.
You can blame inflationary pressures, the expansion of the money stock, the war in Ukraine or China. But the point is that so long as upward pressure exists, the pain at the pump will serve MUSA well.
Interestingly, MUSA appears to be forming a bullish flag formation between early March of this year until now. Make of that what you will.
National Fuel Gas (NFG)
When perusing mid-cap stocks under the present environment, you really can’t go wrong with energy-related companies. One in particular that stood out to me was National Fuel Gas (NYSE:NFG). Let me just say straight out that you can find other mid-caps with a superior performance record. On a YTD basis, NFG is up only 6% at time of writing.
Still, that might appeal to those who’d rather not buy into extreme strength under the notion that there might be more room to grow for NFG. Fair enough. But on a fundamental note, National Fuel Gas is extraordinarily relevant for its diversified natural gas distribution business. Obviously, the underlying commodity is a cynical catalyst, especially when the communities the company serves hits the winter season.
Also, NFG is heavily involved in the exploration and production side of the natural gas business. It’s thinking far ahead, but the company might play a role geopolitically due to Russia’s invasion of Ukraine and subsequent calls to reduce hydrocarbon dependency on the commodities exporter.
Mid-Cap Stocks to Buy: Grocery Outlet (GO)
Although I could cheat this story of mid-cap stocks to buy by exclusively focusing on oil and gas plays, my long-time readers will know that I’m going to do my best to mix it up. Indeed, while energy is supremely important given the new world order, food is just as significant if not more so. We can’t live without it, which is part of the reason why Grocery Outlet (NASDAQ:GO) has performed so well.
But the vast majority of the upside comes from the company’s outstanding results for its fiscal first quarter. On the top line, revenue increased by 10.5% on a year-over-year basis to $831.4 million. This figure was noticeably above Wall Street’s consensus target calling for $810.4 million. As well, Grocery Outlet produced an earnings per share of 12 cents, above analysts estimate of 10 cents.
To sum up, despite rising costs eating into the grocer’s margins, it still put up outstanding numbers. Circumstances should continue to be robust for GO stock since consumers will likely eschew discretionary spending for the essentials.
Okay, I’m going to have to dip a little bit into the political realm with Olin (NYSE:OLN) so if you don’t want any hint of controversy in your portfolio, this is one of the names among mid-cap stocks to skip. While Olin is perhaps best known for its core chemicals business, it also owns the Winchester brand of ammunition.
So you probably know where I’m going with this. Firearms have always been popular in the U.S., which for years has had more guns than people within its borders. But they especially became trendy when the coronavirus pandemic hit, which caused fears of social unrest.
These days, Americans have calmed down about Covid-19. But many have not calmed down about Democrats taking away their constitutional rights. First, the Biden administration has signaled interest in greater firearms regulations. Second, gun violence has become a worrying threat to American youth.
No matter what side of the debate you find yourself in, one thing is clear: gun advocates don’t want their rights to be trampled. Cynically, this augurs well for OLN stock, which may receive a downwind benefit.
Mid-Cap Stocks to Buy: ManpowerGroup (MAN)
I’ve long been skeptical about the work-from-home phenomenon because of one harsh reality. If your job can be done in your living room, it can be done in India. Honestly, why would a company pay hefty premiums for American white-collar labor that’s difficult to quantify in the best of times when it can be outsourced to India for pennies on the dollar?
Well, work from home might be coming to an end, which then bodes well for staffing agency Manpower (NYSE:MAN). One of the biggest organizations of its kind, Manpower may be in prime position to advantage the spring-back effect in the workforce: eventually, it may be an employer’s market, not a jobhunter’s market.
Fundamentally, it doesn’t make sense for an economy as robust as the U.S. for its employers to beg for workers to apply for open positions. In most cases in life, rare desirable items are valued at an incredibly high premium. Put another way, the irrationality of the American workforce will likely shift, thus filling Manpower’s roster with eager candidates.
Ollie’s Bargain Outlet (OLLI)
The corporate identity of Ollie’s Bargain Outlet (NASDAQ:OLLI) gives away why I’m including OLLI on this list of mid-cap stocks to consider. For months if not years, a rising chorus of analysts have sounded the alarm regarding both domestic and global recession fears. Now, with the equities market tanking — along with other sectors like cryptocurrencies — those fears appear poised to materialize.
Bummer. About the only positive I can present are mid-cap stocks that are tied to recession-resistant businesses like discount retailers. Per its website, Ollie’s offers brand-name merchandise at up to 70% off what you might find at traditional retailers. Now, everybody likes a good deal. But during an economic downturn, such deals become necessities.
Thus, the bullish narrative for OLLI stock writes itself. In 2009, the New York Times detailed how discount dollar stores seized the moment during the Great Recession. More recently, NBC News reported last December that rising inflation caused an identical consumer shift. Even though OLLI is struggling, it might just bounce back.
Mid-Cap Stocks to Buy: Yelp (YELP)
With the last idea regarding mid-cap stocks to consider, I’m going to have a little speculative fun with Yelp (NYSE:YELP). First thing’s first, let me keep the attorneys happy by stating up front that you should not buy YELP stock. Why? Because it’s flipping volatile, shedding over 23% YTD and losing 17% of market value in the trailing five days through the May 11 session.
So, why am I bringing up the company then? As you know, Yelp is a popular social network where users can rate and share their experiences with the businesses they patronize. In a way, it holds companies accountable for their behavior while also allowing managers to have their say as well. It’s a relevant business in this social-media-driven ecosystem but it will become more vital during a recession.
While it’s just my opinion, I believe that consumers will pay more attention to Yelp reviews when times are tough. After all, the average household won’t have the luxury of being flippant with their money, especially when job losses are involved.
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.