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The 7 Best Mid-Cap Stocks to Buy Right Now

Editor’s note: This article is regularly updated with the latest information.

  • Take advantage of both worlds with the best mid-cap stocks to buy.
  • Jack In The Box (JACK): Jack combines strong income with a low valuation.
  • Domino’s Pizza (DPZ): Domino’s brings monster income performance to the table.
  • Barnes Group (B): Normalization trends could right Barnes’ ship.
  • Sapiens International (SPNS): Sapiens features solid financials.
  • Proto Labs (PRLB): Proto Labs features a strong balance sheet.
  • PriceSmart (PSMT): PriceSmart brings economic relevance to the table.
  • Himax Technologies (HIMX): Himax is incredibly undervalued.
best mid cap stocks - The 7 Best Mid-Cap Stocks to Buy Right Now

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Although the blue chips are the subject of most of the headlines and the small-capitalization firms (sometimes) deliver very high profits, investors at this juncture may want to consider the best mid-cap stocks to buy.

The best mid-cap stocks to buy have favorable risk-return  ratios. That’s because they are not as risky as startups, yet they’re also small enough to deliver outstanding gains compared to blue chips. Thus,  mid-cap stocks often represent the best of both worlds.

To be fair, the larger players are usually more stable than mid-caps, while the smaller names can climb further. Nevertheless, at this particular fork in the road, when myriad macroeconomic uncertainties exist, the best mid-cap stocks to buy may offer an ideal compromise. Thus, you should check out the stocks below.

These picks carry relatively limited risk, and their market capitalizations are between $1 billion and $2 billion.

JACK Jack In The Box $88.75
DPZ Domino’s Pizza $335
B Barnes Group $35
SPNS Sapiens International $19.85
PRLB Proto Labs $38.61
PSMT PriceSmart $64.20
HIMX Himax Technologies $5.70

Jack In The Box (JACK)

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Jack In The Box (NASDAQ:JACK) is an American fast-food restaurant chain that was founded in  1951. The chain has over 2,000 locations, most of which are on the West Coast. Currently, the company commands a market capitalization of $1.85 billion. Since the start of the year, JACK  is little changed.

Fundamentally, Jack might benefit from the economic pressures negatively impacting consumers. Specifically, with fears of a global recession rising, people will likely seek to buy cheaper meals,  benefitting fast-food chains.

Generally speaking, Jack reports strong financial results and is a cheap stock. For instance, the company has delivered average annual revenue growth rate of 19% and a net margin of 8.1% over the last three years.  Both figures are well above the median levels of the industry.

At the same time, investors can own JACK’s shares for 13.2 times its forward earnings. That’s below the industry’s median forward price-earnings ratio of 15.8 times, making JACK one of the best mid-cap stocks to buy.

Domino’s Pizza (DPZ)

A tall Domino's Pizza (DPZ) sign stands in Eau Claire, Wisconsin.

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Domino’s Pizza (NYSE:DPZ)is a multinational pizza restaurant chain founded in 1960. Domino’s carries a market cap of $11.8 billion. Since the start of the year, DPZ stock has dropped 41%. However, in the last month, the shares have gained almost 6%, reflecting a possible comeback effort by the shares.

As with Jack In The Box, which I discussed above, Domino’s Pizza should benefit from economic pressures that force consumers to buy cheaper food from restaurants.

However, DPZ has also posted strong financial results, making it one of the best mid-cap stocks to buy. Simply put, Domino’s is an income powerhouse Its average revenue growth rate over the last three years stands at 13.4%, better than 89% of its peers. Further, its average net margin over that period was 10%, superior to 88% of its peers.

In terms of valuation, Domino’s has a price-earnings-growth (PEG) ratio of 1.43 times. That’s much lower  –and, consequently, much better — than the industry median of 2.56 times.

Barnes Group (B)

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Barnes Group (NYSE:B) is a global industrial and aerospace manufacturer and service provider.  Barnes carries a market cap of $1.74 billion. Since the start of the year, the shares dropped 26%. Notably, however ,in the last month, B stock has gained 14%, signifying a comeback effort by the shares.

Barnes should benefit from the gradual normalization of society in the wake of the coronavirus pandemic. True, its financial situation isn’t the greatest  right now. For instance, last quarter, its top line  was little changed versus Q2 of 2021. However, if  travel demand – particularly business travel – normalizes, Barnes’ sales could climb.

For now, B represents a discounted play among the best mid-cap stocks to buy. Its Shiller price-earnings ratio sits at 12.34, favorably below the industry median of 21.94.

Sapiens International (SPNS)

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Based in Israel, Sapiens International (NASDAQ:SPNS) develops computer software for the insurance industry. The company features a market cap of $1.1 billion, making it one of the smaller names on this list of best mid-cap stocks to buy. Since the beginning of the year, SPNS has dropped43%. Still, in the last five days, the shares have gained 3.9%.

Fundamentally, Sapiens might benefit from serving an industry that enjoys inelastic demand. Regardless of economic pressures, people need insurance coverage for critical areas. Otherwise, they could suffer financial devastation.

On the financial front, Sapiens features a PEG ratio of 0.75 times, much lower than the industry median of 1.43. More importantly, its three-year revenue growth rate stands at 12.8%, better than almost 65% of  its industry. As well, its operating margin is 13.8%, superior to 80% of its peers.

Proto Labs (PRLB)

Human hand touching the thumb of a 3D printed hand

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Using 3D printers, Proto Labs (NYSE:PRLB) rapidly manufactures custom parts for prototyping and short-run production. Proto serves several industries, including medical devices, electronics, appliances, automotive and consumer products.

The company’s market cap is $1.05 billion. Since the start of this year, PRLB lost 25% of its value. However, normalization trends may lift the company’s sales. Indeed, in the last month, the shares have gained 5%.

In the meantime, Proto Labs should be able to tread water just fine. It carries a strong balance sheet, particularly a cash-to-debt ratio of 14 times. As well, its Altman Z-Score of 7.83 indicates very low bankruptcy risk.

Gurufocus.com labels PRLB as significantly undervalued. Notably, its price-to-book ratio is 1.3 times, more favorable  than the industry median of 1.8. Therefore, Proto Labs is undervalued and among the best mid-cap stocks to buy.

PriceSmart (PSMT)

Human hand touching the thumb of a 3D printed hand

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PriceSmart (NASDAQ:PSMT) is the largest operator of membership warehouse clubs in Central America and the Caribbean, and has recently entered the South American region by launching warehouse clubs in Colombia. While everyone always wants to save money, that inclination will likely only rise with recession fears impacting the world.

At the moment, PriceSmart has a market cap of just under $2 billion. In 2022, PSMT gave up 12% of its value. However, the shares recently have had some positive momentum, gaining over 9% in the last month.

Investors will appreciate the underlying strength of the company’s balance sheet. For instance, its cash-debt ratio is 0.79 times,  better than 64.5% of the industry. Also, its Altman Z-Score comes in at 4.62, indicating that it has low bankruptcy risk.

Finally, PriceSmart has a net margin of 2.55%, which is higher than 60% of the sector.

Himax Technologies (HIMX)

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Based in Taiwan, Himax Technologies (NASDAQ:HIMX) is a leading supplier of “display imaging processing technologies” used in a variety of “consumer electronic” products, including laptops, TVs, and smartphones. While geopolitical rumblings pressured HIMX, it’s an interesting, contrarian stock. Currently, the company carries a market cap of a hair over $1 billion. Since the beginning of the year, HIMX has dropped over 55%.

That said, in the last month, HIMX gained a stout 19%. Much of this enthusiasm may center on its income statement metrics. For instance, Himax has enjoyed an average  annual revenue growth rate of 28.2% in the last three years, ranking higher than almost 86% of the semiconductor industry. On the bottom line, HIMX features a net margin of 28%, beating out over 90% of its rivals.

If that wasn’t enough, Himax also benefits from a high-quality business. Its return on equity is 55.5%, which is in the top 3% of the industry. Yet its forward PE ratio is under eight times. For risk-takers, HIMX is easily one of the best mid-cap stocks to 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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