Amid volatility induced by various global factors, investors should focus on companies delivering earnings, participating in economic recovery, and possessing pricing power. Such are mid-cap stocks that are positioned to benefit from the rise of inflation and recovery from the lockdowns.
Combining growth and profitability the mid-caps can represent the best of both worlds for investors.
Finbold identified two mid-caps that are worth keeping an eye on since their performance has been stellar so far and promises to be even better in the long term.
Graphic Packaging Holding (GPK)
Leading provider of paper-based packaging solutions has had a nice 2021, growing at a steady clip. Sales reached $1.99 billion against the expected $1.91 billion with organic sales growth of 2% which is a solid number for this niche of business.
Net sales are up 20% year-on-year with a growth estimate from the company for 2022. The solid 1.38% dividend yield seems pretty secure with hinted increases for 2022.
Shares have been rising recently from March lows, pushing past all daily Simple Moving Averages. In the last trading sessions, higher volumes were noticed which lead the price to pop by over 5% for the day. A solid entry position was presented to patient investors around the $21 mark.
Analysts give the stock a moderate buy rating with a predicted next 12 months’ average price of $24.80. There is a potential 13.76% upside from the current trading price of $21.80 which could be a nice entry position for prudent investors.
LPL Financial Holdings (LPLA)
The company is in super growth mode transforming from a traditional independent broker-dealer to offering more services for breakaway brokers. In the last quarter, the company grew 13% annualized, adding $89 billion of assets.
A robust pipeline and organic growth opportunities should serve the company well going into Q2 of 2022. Shares have recovered from March lows of over 50% now closer in line with expectations and offering a 0.46% annual dividend. Unusual volume activity has been also noticed, which was buying pressure in April propelling the price higher.
Analysts agree that the stock is a strong buy, predicting the average next 12-months price to be $240 or 9.83%, higher than the current trading price of $218.52. The bullish scenario sees the stock reach a price of $270.
Key to diversification
While viewed as more stable than small-caps, stocks belonging to the mid-tier are usually seen as keys to proper portfolio diversification because of their added growth potential. Investors prepared for a longer-term investment, of up to five years or longer should look to mid-caps.
Current global conditions usually bring more volatility to the sector but the two above are tested and growing companies with strong customer bases. Recent results offer a reprieve and there is a pretty safe dividend accompanying both which can increase the compounding effect while waiting for the companies to grow.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.