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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. That said, here is one mid-cap stock with huge upside potential and two that could be down big.
Two Mid-Cap Stocks to Sell:
Williams-Sonoma (WSM)
Market Cap: $29.68 billion
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE:WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.
Why Does WSM Fall Short?
- Annual revenue declines of 1.1% over the last three years indicate problems with its market positioning
- Store closures are a headwind for growth and suggest it’s rightsizing operations to optimize sales at existing locations
- Earnings per share lagged its peers over the last three years as they only grew by 6.4% annually
At $253.41 per share, Williams-Sonoma trades at 24.4x forward P/E. Read our free research report to see why you should think twice about including WSM in your portfolio.
Watsco (WSO)
Market Cap: $11.49 billion
Originally a manufacturing company, Watsco (NYSE:WSO) today only distributes air conditioning, heating, and refrigeration equipment, as well as related parts and supplies.
Why Do We Think WSO Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1% annually over the last two years
- Issuance of new shares over the last two years caused its earnings per share to fall by 6.1% annually, even worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
Watsco’s stock price of $298.49 implies a valuation ratio of 23.7x forward P/E. Check out our free in-depth research report to learn more about why WSO doesn’t pass our bar.
One Mid-Cap Stock to Watch:
Dynatrace (DT)
Market Cap: $18.42 billion
With its platform processing over 30 trillion pieces of IT performance data daily, Dynatrace (NYSE:DT) provides an AI-powered platform that helps organizations monitor, secure, and optimize their applications and IT infrastructure across cloud environments.
Why Does DT Stand Out?
- Ability to secure long-term commitments with customers is evident in its 18.2% ARR growth over the last year
- Software is difficult to replicate at scale and results in a top-tier gross margin of 81.6%
- Strong free cash flow margin of 27.3% enables it to reinvest or return capital consistently
Dynatrace is trading at $64.08 per share, or 7.8x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.