With uncertainty continuing to cloud the market, finding the next big winners will become increasingly challenging. For those looking to outperform the market in the next few years, high-growth mid-cap stocks can help you get there.
Mid-cap stocks are great for investors who are looking for more stable companies with a proven track record of profitability. Many of the established players in this sphere are set to benefit from secular tailwinds in the economy over the next decade. This includes areas like artificial intelligence, cloud computing, 5G, and infrastructure development.
Additionally, investors can look towards companies that are currently expanding their earnings, EBITDA and free cash flow. By keeping abreast with quarterly financial results, you can be up to date with companies latest forward guidance. While these are not the only important financial metrics to assess, they can provide you with a solid footing of their future growth prospects.
Now, here are the three best high-growth mid-cap stocks that could deliver 300% returns or more by 2026.
Carlisle Companies (CSL)
Carlisle Companies (NYSE:CSL), a diversified supplier of construction materials, stands as one of the top high-growth mid-cap stocks to buy in Q3. The company’s growth strategy through acquisitions, has significantly boosted its earnings, operating margins and free cash flow since the 2020 COVID-19 pandemic.
Carlisle is an incredible business that you’ve probably never heard of before. It operates as a manufacturer and supplier of single-ply roofing products for commercial, residential, and industrial clients. Its two segments, Carlisle Construction Materials and Carlisle Weatherproofing Technologies own several profitable brands that cover the entire sector.
Additionally, its operating margin expansion and free cash flow growth over the last few years have been notable. Free cash flow surpassed $1 billion in the 2023 fiscal year and profitability is on the rise. In Q1 FY24, revenue increased 23% year over year to $1.1 billion, with earnings per share more than doubling to $3.97 per share. CEO Chris Koch has committed to the company’s 2030 vision plan, as well as 10% revenue growth and adjusted EBITDA margin expansions in FY24.
Comfort Systems USA (FIX)
Comfort Systems USA (NYSE:FIX) is a high-growth pick that specializes in heating, ventilation, and air conditioning (HVAC) services. Its focus on energy-efficient solutions for commercial and industrial clients remains a key driver of its growth over the years.
As of July 2024, the company comprises 45 operating locations in over 170 locations across the country. This is a significant increase from its just 12 operating companies when it first went public in 1997. Additionally, its acquisition strategy has allowed it to diversify in areas such as mechanical, electrical, process piping, and modular construction.
Presently, the company’s electrical and mechanical operating units continue to flourish. In the first quarter, revenue increased 31% year over year to $1.54 billion. Net earnings rose 68% year over year to $96.3 million, with its backlog hitting a record high of $5.91 billion. With robust demand for its service offerings, expect continued strong results in 2024 and beyond.
Dycom Industries (DY)
Dycom Industries (NYSE:DY) is the final selection among the best high-growth mid-cap stocks to buy now. The company is set to be a major beneficiary of the strong demand for fiber optic networks over the next decade.
Dycom Industries’ expertise in high fiber optic networks, construction, maintenance, and installation has made it a preferred partner to the telecom industry. It will experience significant growth in the coming years, driven by the strong demand for 5G networks and high-speed data connectivity. Moreover, the global rollout of 5G networks will not be easy and will require upgrades and expansions of current networks.
Dycom is benefitting from this trend, and this is supported by its strong backlog and earnings growth. In Q1 FY25, revenue increased 9% year over year to $1.14 billion. Net earnings swelled 21% to $62.6 million, or $2.12 per share. With adjusted EBITDA forecasted to rise between 25 to 75 basis points in Q2 FY25, DY holds a promising future.
On the date of publication, Terel Miles 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
