Mid-cap stocks often strike the right balance between having proven business models and market opportunities that can support $100 billion corporations. However, they face intense competition from scaled industry giants and can be disrupted by new innovative players vying for a slice of the pie.
This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are two mid-cap stocks with massive growth potential and one that could be down big.
One Mid-Cap Stock to Sell:
Stanley Black & Decker (SWK)
Market Cap: $12.67 billion
With an iconic “STANLEY” logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE: SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.
Why Should You Dump SWK?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 9.6% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.7 percentage points
Stanley Black & Decker’s stock price of $81.54 implies a valuation ratio of 16x forward P/E. Check out our free in-depth research report to learn more about why SWK doesn’t pass our bar.
Two Mid-Cap Stocks to Watch:
Guidewire Software (GWRE)
Market Cap: $13.76 billion
With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.
Why Do We Like GWRE?
- Billings have averaged 20.7% growth over the last year, showing it’s securing new contracts that could potentially increase in value over time
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
- Has the option to reinvest or return capital to investors as its 21.3% free cash flow margin is well above its peers
Guidewire Software is trading at $161.91 per share, or 9.5x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
DexCom (DXCM)
Market Cap: $28.6 billion
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ: DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.
Why Is DXCM a Good Business?
- Average organic revenue growth of 16.4% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 17.5% annually
- Free cash flow margin expanded by 17.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
At $73.12 per share, DexCom trades at 30.3x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
