The U.S. stock market has shown renewed strength in 2024, continuing the bullish momentum from 2023. Despite minor fluctuations, the major indexes — Dow, S&P 500, and Nasdaq Composite — have all seen significant gains this year. Notably, the mid-cap benchmark S&P 400 Index has also advanced by 5.3% year-to-date, reflecting the growing interest in mid-cap stocks. In this article, we’ll explore why mid-cap stocks are an excellent investment for the long term and present five must-buy Mid-Cap US Stocks with strong near-term potential.
Why Should You Invest in Mid-Cap Stocks?
Investing in mid-cap stocks is often considered a strategic move for portfolio diversification. These stocks combine the stability of large-cap stocks with the growth potential of small-cap stocks. Mid-cap companies typically have established business models, experienced management teams, and access to capital markets, which positions them well for growth. Moreover, mid-cap stocks are less susceptible to international exposure risks than large-cap stocks, making them a safer bet during economic downturns.
Are Mid-Cap Stocks Good for Long-Term Investment?
Yes, mid-cap stocks are an excellent choice for long-term investments. They offer a balanced mix of growth potential and stability, making them less volatile than small-cap stocks but more dynamic than large-cap stocks. Over time, many mid-cap stocks have the potential to grow into large-cap stocks, providing substantial returns to long-term investors.
Will Mid-Cap Stocks Perform Well in 2024?
Given the current market trends, mid-cap stocks are well-positioned to perform strongly in 2024. The continued economic recovery, coupled with favorable market conditions, is likely to boost the growth of mid-cap companies. Moreover, with the Federal Reserve’s decision to maintain interest rates, mid-cap stocks with robust fundamentals are expected to thrive.
Top 5 Mid-Cap U.S. Stocks to Buy in 2024
To help you make informed investment decisions, we’ve identified five mid-cap stocks with strong near-term potential. These stocks have been selected based on their recent earnings revisions, growth potential, and market performance. Each of these stocks is ranked #1 (Strong Buy) by Zacks Investment Research.
1. The Gap Inc. (GPS)
- Market Cap: $8.5 billion
- Expected Revenue Growth: 0.2%
- Expected Earnings Growth: 21.7%
- Recent Price Target Increase: 13.5%
The Gap Inc. has been riding high on improved promotions and lower airfreight costs, which have significantly boosted its margins. The company is executing its Power Plan 2023, focusing on cost-saving actions such as reducing advertising expenses and technology investments. These efforts have led to a notable expansion in gross margins, driven by higher merchandise margins, lower commodity costs, and better promotional activity. With a strong management strategy and positive earnings revisions, GPS is poised for growth in 2024.
2. Abercrombie & Fitch Co. (ANF)
- Market Cap: $9.2 billion
- Expected Revenue Growth: 10.4%
- Expected Earnings Growth: 47.3%
- Recent Price Target Increase: 4.1%
Abercrombie & Fitch has shown remarkable resilience, benefiting from strong sales growth across both of its brands. The company’s focus on margin improvement through reduced freight costs and enhanced average unit retail has paid off, leading to impressive earnings growth. As the company continues to capitalize on favorable market conditions, ANF remains a top pick for mid-cap investors.
3. Duolingo Inc. (DUOL)
- Market Cap: $9.5 billion
- Expected Revenue Growth: 37.8%
- Expected Earnings Growth: Over 100%
- Recent Price Target Increase: 27.2%
Duolingo, a leading mobile learning platform, has been expanding its global presence, offering courses in 40 different languages. The company’s innovative approach to language learning and its successful monetization strategy have driven significant revenue and earnings growth. With a robust product lineup and a growing user base, DUOL is well-positioned for continued success in 2024.
4. Paycom Software Inc. (PAYC)
- Market Cap: $9.8 billion
- Expected Revenue Growth: 10.2%
- Expected Earnings Growth: 11.4% (next year)
- Recent Price Target Increase: 27.1%
Paycom Software has consistently delivered strong financial performance, driven by new client acquisitions and effective cross-selling strategies. The company’s comprehensive product offerings and focus on employee efficiency have made it a leader in the human capital management space. Despite macroeconomic challenges, PAYC’s growth prospects remain strong, making it a compelling investment opportunity.
5. Elbit Systems Ltd. (ESLT)
- Market Cap: $9.3 billion
- Expected Revenue Growth: 7.3%
- Expected Earnings Growth: 11.2%
- Recent Price Target Increase: 20.4%
Elbit Systems is a global leader in defense technology, providing cutting-edge solutions to military forces worldwide. The company’s strong focus on innovation and its leadership in Night Vision Goggles and Head-Up Displays have positioned it well for future growth. With a solid order book and continued investment in R&D, ESLT is set to deliver robust returns in 2024.
Mid-Cap Stocks Performance Summary
| Stock | Market Cap (Billion $) | Expected Revenue Growth (%) | Expected Earnings Growth (%) | Recent Price Target Increase (%) |
|---|---|---|---|---|
| The Gap Inc. (GPS) | 8.5 | 0.2 | 21.7 | 13.5 |
| Abercrombie & Fitch Co. (ANF) | 9.2 | 10.4 | 47.3 | 4.1 |
| Duolingo Inc. (DUOL) | 9.5 | 37.8 | 100+ | 27.2 |
| Paycom Software Inc. (PAYC) | 9.8 | 10.2 | 11.4 (Next Year) | 27.1 |
| Elbit Systems Ltd. (ESLT) | 9.3 | 7.3 | 11.2 | 20.4 |
Conclusion: The Long-Term Potential of Mid-Cap Stocks
Mid-cap stocks offer a unique combination of growth potential and stability, making them an ideal choice for long-term investors. As the U.S. economy continues to recover and thrive, these stocks are likely to outperform their small-cap counterparts while providing more dynamic growth than large-cap stocks. The five mid-cap stocks highlighted in this article are well-positioned to deliver strong returns in 2024 and beyond.
Investing in mid-cap stocks not only diversifies your portfolio but also provides an opportunity to capitalize on the growth of emerging leaders in various industries. Whether you’re looking for stocks with strong near-term potential or long-term growth prospects, these mid-cap stocks should be on your radar.
By focusing on companies with solid fundamentals, positive earnings revisions, and strong market positioning, you can build a resilient portfolio that is well-equipped to weather market fluctuations and capitalize on growth opportunities. As always, it’s essential to conduct thorough research and consider your risk tolerance before making any investment decisions.
In summary, mid-cap stocks represent a compelling investment opportunity for those seeking a balance between growth and stability. With the right strategy, you can leverage the potential of these stocks to achieve your long-term financial goals.
