Important voices in the investment world predict that 2024 could be a very strong year for mid-cap stocks. Janus Henderson portfolio manager Brian Demain believes the outlook for mid caps looks favorable as rate hikes slow and cuts draw nearer. Demain also anticipates that they could perform very well due to their relative underperformance to large cap stocks in 2023.
Other prominent investors including Fundstrat head Tom Lee also expect large cap stocks to become less important. So, mid-cap equities will be marked by opportunity in the coming year, that much is clear. That raises the question of which stocks among them are best positioned?
Toast (TOST)
Toast (NYSE:TOST) is a payment application primarily serving the restaurant sector. The company offers kiosks, terminals, and guest facing displays that increase the ease of payment at restaurants. Toast is well positioned to benefit from a pivot that should send growth stocks higher in 2024.
Toast is certainly a firm that is in a growth mode. In the third quarter, the company’s annualized recurring revenue (ARR) increased by 40%, reaching $1.22 billion.The firm’s gross payment volume increased by 34% to $33.7 billion.
Those growth metrics will serve the company well as the economy progresses toward rate Cuts expected in 2024. The cost of lending will decrease and that will in turn make growth firms—often marked by losses—more attractive overall. Speaking of losses, Toast continues to report losses overall. However, the good news is that it’s losses narrowed to $31 million in the most recent quarter from $98 million a year prior.
With strong growth metrics on its side, 2024 promises to be a strong year for Mid cap stocks including Toast.
Progyny (PGNY)
Progyny (NASDAQ:PGNY) is a fertility benefits company and stock that is poised to continue growing for obvious reasons. Globally, fertility rates are falling. In the United States, the average woman is expected to birth 1.6 children, below the replacement rate of 2.1. In the East Asian nations of South Korea and Taiwan the problem is even more stark: in both nations the fertility rate is below one currently.
Progyny is a fertility benefits company that provides fertility solutions to employers. That includes services such as in vitro fertilization and egg freezing among others.
Like Toast, immediately above, Progyny is currently in growth mode. In the third quarter revenues increased by 37%, eclipsing $280 million. The company makes money from fertility and pharmacy benefit revenues. Its client base grew from 282 to 392 between the third quarter of 2022 and the third quarter of 2023.
Progyny reported net income during both of those periods with a slight increase during the most recent quarter, pushing it above $15 million. If you are looking for strong mid-cap stocks, start here.
DexCom (DXCM)
DexCom (NASDAQ:DXCM) has garnered a lot of attention over the last few years. Investors continue to be interested in the diabetes market which is becoming increasingly valuable as obesity rates climb to historic highs. By 2035, more than half of people on earth are expected to be obese. Diabetes is highly correlated with obesity, which is going to continue to make stocks like DexCom increasingly attractive.
The company has taken a back seat in recent months. Weight loss drugs Wegovy and Ozempic have exploded. Their rise to prominence has overshadowed what has been a very strong year for DexCom.
The company just released preliminary results for the fourth quarter that suggest revenues will increase during the period by at least 26% to $1.03 billion. The company successfully rolled out its Dexcom G7 continuous glucose monitoring sensor In the U.S. It is now sold in more than 15 International markets.
While weight-loss drugs had a massive 2023, 2024 stands to be the year for mid-cap stocks in the diabetes sector.
On the date of publication, Alex Sirois 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.
