Mid-cap stocks aren’t exactly spotlight hogs.
Many investors buy into large companies because they tends to be more stable, plus information and media coverage are more readily available. Investors also know to buy small-cap stocks if they want to make aggressive growth investments to boost their long-term returns. But mid-caps – typically, stocks between $2 billion and $10 billion in market value – tend to get lost in the mix.
That’s unfortunate, because over the long haul, they tend to outperform their larger and smaller brethren.
Between 2015 and 2019, the S&P 500 outperformed both the S&P MidCap 400 and the S&P SmallCap 600 on a total-return basis (price plus dividends). In the 10 years from 2010 and 2019, small caps flipped the script, outperforming the large- and mid-cap indices. But across the entire span, from 2005 to 2019, the MidCap 400 delivered a total return of 293% – 14 percentage points higher than the SmallCap 600, and 33 percentage points better than the S&P 500. Experts point out that outperformance looks even better once you adjust for risk.
“Large-cap stocks offer the stability that comes with mature multinational businesses with diverse revenue sources,” Matthew Bartolini, head of SPDR Americas Research, writes in a 2019 note to clients. “Small-cap stocks are unproven, but they offer potential for further expansion and market penetration. And midcaps offer a unique combination of the managerial maturity associated with large caps and the operational dexterity of small caps.”
With this in mind, here are 15 of the best mid-cap stocks to buy to give you upside growth potential in stronger economies, along with some downside protection when the market environment looks weaker.