15 Mighty Mid-Cap Stocks to Buy for 2022
Mid-caps are the market's so-called 'sweet spot,' offering up an ideal combination of financial stability and growth potential.
Mid-cap stocks – typically, companies between $2 billion to $10 billion, though some indexes view them differently – are too often overlooked. Large-cap stocks are valued for their stability and dividends, while small-cap stocks are favored for their growth prospects.
But avoid the happy medium at your own peril. Many of 2022's best mid-cap stocks might just be among 2022's best stocks period.
A couple years ago, Canadian mutual fund and exchange-traded fund (ETF) provider Mackenzie Financial made a convincing universal case for U.S. mid-cap stocks. It had four arguments. Namely, mid-caps …
- Give you the stability of large-cap stocks combined with the growth of small-cap stocks.
- Have historically provided better risk/return characteristics.
- Enjoy far less analyst coverage than large caps, which offers active managers an edge.
- Make great takeover targets. Mackenzie pointed to 10 years of data through October 2018 showing that, of 11,270 mergers and acquisitions, 91% involved sums between $500 million and $5 billion. So even though large deals get a lot of press, small- and mid-cap takeovers happen far more often.
Through October 2018, it looked at 11,270 M&A deals over 10 years. It found that 91% of the deals were for companies valued between $500 million and $5 billion. So, even though large deals get all the press, it's the smaller acquisitions that happen more often.
Mid-cap stocks – which Mackenzie refers to as the "sweet spot" of investing – can best be described as consistent performers. Using a baseball analogy, they might not hit you a bunch of home runs, but they're sure to knock in a lot of runners, ultimately producing when it counts.
Read on as we evaluate 15 of the best mid-cap stocks to buy for 2022 and beyond.
Data is as of Feb. 3. Analyst opinions from S&P Global Market Intelligence. Stocks are listed in reverse order of analysts' consensus rating.
Globus Medical
- Market value: $6.9 billion
- Analysts' opinion: 5 Strong Buy, 4 Buy, 4 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.92 (Buy)
- Median target price: $85.92 (27% implied upside)
Globus Medical (GMED, $67.58), founded in 2003, focuses on products that treat musculoskeletal conditions. Since its founding, Globus has introduced more than 220 products into 51 countries worldwide.
Despite COVID-19 putting a dent in surgical procedures, the company's Q3 2021 sales increased by 6.3% to $229.7 million, while adjusted earnings per share (EPS) of 50 cents were a penny higher than the year-ago period. For the nine months ended Sept. 30, revenues were up 27% to $708 million, while profits popped 82.4% to $1.55 per share.
One highlight: The company's Enabling Technologies division, which operates the ExcelsiusGPS robotic navigation system for more accurate spine surgery. While it only accounts for 8% of its overall revenue, its sales doubled through the first three quarters of 2021.
For the entire fiscal 2021, Globus expects sales of $950 million and non-GAAP EPS of $2.00. That's 7.3 times sales and 33.8 times earnings. That's not cheap. However, if Globus Medical's robotic system continues to gain traction with orthopedic surgeons in the U.S., GMED could be one of 2022's best mid-cap stocks despite the lofty multiple.
SPS Commerce
- Market value: $4.3 billion
- Analysts' opinion: 4 Strong Buy, 2 Buy, 3 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.89 (Buy)
- Median target price: $187.29 (58% implied upside)
SPS Commerce (SPSC, $118.66) started life in 1987 as St. Paul Software in St. Paul, Minnesota, and it was reincorporated as SPS Commerce in May 2001. CEO Archie Black has been at the helm since its corporate reorganization and shakeup two decades ago, and oversaw the company's April 2010 initial public offering (IPO) at $12 per share.
SPS Commerce provides a cloud-based retail trading partner network to more than 95,000 customers worldwide. Of those customers, more than 35,000 provided recurring revenue in Q3 2021. That worked out to $10,350 per customer on an annualized basis. SPS's goal is to raise those numbers to 200,000 recurring revenue customers and $25,000 annually per customer.
If you care about consistent growth, SPS Commerce delivers. The company posted $45 million in sales in 2010, and it has boosted the top line every year since; it's projecting the same for full-year 2021, estimating $383 million in revenues. Meanwhile, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) has increased 32% annually over the past 11 years to an estimated $106 million for 2021. The company has gotten better at squeezing profits from its top line, too; adjusted EBITDA margin was 14% in 2016, and grew to 28% by 2020. It's targeting 35% margins going forward.
Mergers and acquisitions (M&A) will also be key to the company's growth.
"We believe a key theme in the company's ability to drive higher net quarterly customer additions is rooted in its acquisitions of companies like Data Masons, Mapadoc, and EDIAdmin," says Needham analyst Scott Berg, who rates the stock at Buy.
Based on analyst consensus estimates for $2.02 per share in 2022 earnings, SPSC currently trades at about 59 times expected profits. Its price-to-sales (P/S) ratio of 12 is 50% higher than its five-year average.
Translation: SPSC shares aren't cheap. But growth stocks rarely are, and that's OK as long as it maintains its penchant for consistent growth. Long-term, investors ought to do well with this mid-cap supply chain stock.
Innovative Industrial Properties
- Market value: $4.9 billion
- Analysts' opinion: 3 Strong Buy, 3 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.88 (Buy)
- Median target price: $282.71 (47% implied upside)
It's hard to believe that only a handful of analysts cover Innovative Industrial Properties (IIPR, $192.41). But perhaps it's the nature of the business. IIPR is a real estate investment trust (REIT) that owns, operates and leases its industrial properties to state-licensed medical-use cannabis producers.
Despite marijuana's growth prospects, cannabis plays continue to struggle. For instance, IIPR has taken a deep dive in 2022, triggered in part by its early January announcement that the REIT would exchange $2.3 million in cash and issue 1.68 million of its shares in return for $110 million of its 3.75% Exchangeable Senior Notes due 2024. With the exchange, the balance on these notes was reduced to $33.4 million.
Between the share issuance above and an outstanding at-the-market offering of approximately $232 million, investors balked. Assuming the entire at-the-market offering is sold at current market prices, that works out to about 2.9 million shares issued, increasing its shares outstanding by roughly 12%.
No wonder IIPR has lost more than a quarter of its value in January.
But in IIPR's defense, back in May 2021, the company issued $300 million worth of 5.5% unsecured senior notes maturing in 2026. That was 50% higher than its original plans, so it made sense to exchange some of its exchangeable senior notes.
Meanwhile, the underlying business continues to grow. As the REIT stated in its early January update, it acquired 29 properties between Oct. 1, 2021, and Jan. 5, 2022. Its total investment was $176.1 million for 395,000 rentable square feet. It now owns 103 properties with 7.7 million rentable square feet and another 2.5 million under development in 19 states.
Not to mention that IIPR is a serial dividend raiser, with the payout exploding by 900% since 2017.
With state-regulated cannabis sales expected to grow to $41 billion by 2025 from $20 billion in 2020, IIPR remains an excellent way to play the growth in cannabis. Buying in at depressed levels could net you one of the best mid-cap stocks of 2022.
Brady
- Market value: $2.6 billion
- Analysts' opinion: 3 Strong Buy, 0 Buy, 0 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.75 (Buy)
- Median target price: $64.50 (27% implied upside)
When investors think of smaller mid-caps such as Brady (BRC, $50.85), they usually don't think of prolific dividend growth. Yet in September 2021, the Milwaukee-based manufacturer increased its payout by 2.3% to 90 cents per share, marking the 38th consecutive improvement to its regular dividend.
That's better than many S&P 500 Dividend Aristocrats.
Brady's history dates back to 1914, when it was founded by William H. Brady. The company started out marketing store display signs and roadside advertising. In World War II, its business took off, selling self-adhesive preprinted wire markers to the military. And the company finally went public in 1984.
Today, Brady is focused on safety, identification and compliance solutions.
In Q1 of the company's fiscal 2022 (which ends July 31), Brady reported a 16% increase in revenues to $321.5 million. Excluding acquisitions, sales increased by 7% during the quarter. Brady's Identification Solutions business, which accounts for 77% of its revenue, increased by 25.4% during the quarter. That was offset by a 7.8% decline in its Workplace Safety revenue.
But let's not downplay the company's acquisitions, as the company can squeeze plenty of growth out of those, too. In June 2021, Brady acquired The Code Corporation for $173 million. The Utah-based company manufactures high-performance durable barcode scanners and is expected to generate $50 million in its first year under Brady's ownership.
Boot Barn Holdings
- Market value: $2.6 billion
- Analysts' opinion: 7 Strong Buy, 1 Buy, 4 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.75 (Buy)
- Median target price: $135.60 (58% implied upside)
Boot Barn Holdings (BOOT, $85.99) went public in November 2014, selling five million shares of its stock at $16 a share. In seven years, its shares have gained almost 440%. What's truly amazing is that most of these gains came since the March 2020 correction, when it traded as low as $11.
The retailer of western wear apparel and footwear has a four-pronged approach to growth.
First, it wants to drive same-store sales (SSS) growth. Through the third quarter of its fiscal 2022, Boot Barn had two-year SSS growth of 63% – almost 10 times its growth from Q3 2021. Secondly, it continues to push the omnichannel shopping experience. Online sales now account for 16% of its overall revenue, and that number is growing.
The third point is expanding its exclusive brands' portfolio. By doing so, profits will grow exponentially. Between 2012 and 2022, it increased its margins by 10 percentage points. Lastly, Boot Barn wants to up its store count. In 2012, it had 86 stores in eight states. Today, it has 293 stores in 37 states. It believes it can grow its store footprint to beyond 700 stores.
"As we've seen the performance of our new stores in brand-new markets like the ones in Virginia or Ohio or Pennsylvania, not only are we further emboldened by the performance of brand-new stores in brand-new markets and think we can continue to grow our store count there, but at the same time we've been adding stores in mature markets and not really seeing much cannibalization," Conroy told CNBC's Jim Cramer in December.
BOOT shares have plunged by 30% early in 2022, as a few analysts' questions over the path for growth ahead overshadowed a Street-beating fiscal Q3 report. Still, the pros remain largely bullish on Boot Barn's prospects going forward.
"Management has several tangible growth drivers planned for fiscal 2023, including the launch of four new exclusive brands targeting various segments of its customer base, including country apparel and accessories, younger, rodeo-focused western wear, and traditional ranch and cowboy western fits," say William Blair analysts Dylan Carden and Phillip Blee, who rate the stock at Outperform (equivalent of Buy).
United Therapeutics
- Market value: $8.9 billion
- Analysts' opinion: 6 Strong Buy, 3 Buy, 1 Hold, 1 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.73 (Buy)
- Median target price: $232.60 (17% implied upside)
Surgeons at the University of Maryland Medical Center recently performed heart implant surgery on a patient. But the transplant patient didn't receive a human heart – instead, 57-year-old David Bennett was the beneficiary of a genetically modified pig's heart.
United Therapeutics (UTHR, $198.71) subsidiary Revivicor deactivated several genes in the heart so the transplant wouldn't be rejected. It also added six human genes to the pig's genome. The result was the first successful pig-to-human heart transplant.
United Therapeutics develops novel pharmaceutical therapies and technologies that enable increased organ transplants. It is currently developing Tyvaso DPI for the treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD).
In October, the U.S. Food and Drug Administration (FDA) declined to approve the company's new drug application (NDA) for Tyvaso. But the FDA only gave one deficiency in its response, and the company expects approval by summer, possibly earlier.
Not only is United Therapeutics developing life-saving therapies, but it's also doing so as the first publicly traded biotech or pharmaceutical company operating as a public benefit corporation (PBC). Its shareholders approved the conversion at the end of September 2021.
"We are inspired by our shareholders who recognize that caring for our patients, planet, employees, communities, and other stakeholders enhances our ability to generate strong shareholder returns," CEO Martine Rothblatt said at the time.
PBC's are for-profit companies that, in addition to taking into account their shareholders, also consider the best interest of all stakeholders. The business, then, must operate in a responsible and sustainable manner.
If you're an environmental, social and corporate governance (ESG) investor, United Therapeutics might be one of the best mid-cap stocks you can buy.
AtriCure
- Market value: $2.9 billion
- Analysts' opinion: 4 Strong Buy, 3 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.63 (Buy)
- Median target price: $96.86 (53% implied upside)
AtriCure (ATRC, $63.26) is a leading provider of atrial fibrillation (Afib) and left atrial appendage (LAA) management treatments. The company's Isolator Ablation System is sold directly by its sales force to U.S. medical centers. It also markets its products overseas to France, Germany and the U.K.
AtriCure's growth strategy includes developing new products for its core Afib audience, training and educating physicians about its technological advantages, working on expanding adoption of its Afib treatments, and possible acquisitions.
According to Atricure's 2020 10-K, 1.2 million Americans are diagnosed with sustained cardiac arrhythmia. Further, its investor materials cite estimates that 33 million people worldwide suffer from an irregular heartbeat. A 40-year-old male has a 26% chance of receiving this diagnosis in the future. Women are slightly lower at 23%.
The company estimates that 250,000 patients undergoing open-heart surgery worldwide are candidates for surgical ablation. And it estimates the total market opportunity globally is $5 billion annually.
Growth has been there so far. The company's Isolator Ablation System was first approved by the FDA in 2011. Between 2015 and 2919, sales grew by 15% annually; since COVID-19 began, that growth has accelerated to 20% annually.
In the company's most recent quarter, revenues grew 28.6% to $70.5 million, with the U.S. accounting for 82% of sales. The risk here is the bottom line, which declined 83.7% to $691,000. In early January, the company provided preliminary, unaudited figures for Q4 and full-year 2021. And while it expects sales of $274.3 million (+33% year-over-year), it expects to sustain a $1.20-per-share adjusted loss.
Patience is necessary, and most analysts who cover the stock think it will be rewarded.
"We believe AtriCure's highly differentiated, and expanding, suite of atrial fibrillation treatment technologies will continue to demonstrate meaningful top-line growth potential," say Stifel analysts Rick Wise and Anton Heldmann, who rate the stock at Buy. "On top of a solid commercial foundation, the company has multiple tailwinds that include: recently positive, updated clinical guidelines; an expanding and increasingly productive sales force; and a steady cadence of pipeline product launches across key franchises, which, at a minimum, should sustain the company's current trajectory."
CarGurus
- Market value: $3.9 billion
- Analysts' opinion: 8 Strong Buy, 4 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.57 (Buy)
- Median target price: $44.15 (34% implied upside)
CarGurus (CARG, $32.85) operates an online automotive platform that brings together buyers and sellers of vehicles. It operates online marketplaces in the U.S., U.K. and Canada. Its online marketplace is the largest in the U.S. by both visits and inventory.
The Cambridge, Massachusetts-based company was founded in November 2005 and went public in October 2017 at $16 per share. Founder and Executive Chairman Langley Steinert holds 65% of the voting shares.
According to a 2020 study by Bates White Economic Consulting, vehicles listed on CarGurus sell 16% faster than on Autotrader and 22% faster than Cars.com (CARS). For a dealership with 50 cars in its inventory, that translates to five to seven extra vehicle sales per month.
At the end of Q3 2021, CarGurus had almost 24,000 dealerships in the U.S. paying for listings on its site. It had another 6,780 paying in the U.K. and Canada. Also, as of January 2021, CarGurus also owns 51% of CarOffer, a wholesale business, and has the right to buy the rest over the subsequent three years. This business is scaling fast; in Q4 2020, approximately 2,000 dealers were on the CarOffer platform; it was up to 7,000 by the end of Q3 2021.
Needham analyst Chris Pierce (Buy) lays out the bull case for this burgeoning mid-cap stock:
"We anticipate CARG leveraging its industry-leading traffic metrics over the long term to create a compelling end-to-end digital solution for independent brick-and-mortar car dealerships," he says. "In the shorter term, we think CARG's CarOffer acquisition will be more fully appreciated by investors as a way to play the digital transformation happening in the used car auction space, and a way to increase their importance to the dealer community and drive higher dealer count via cross-sell, and potentially higher revenue per dealer, while making them more likely to partner with CARG on a full digital experience."
CarGurus' stock isn't cheap at roughly five times sales, but that's still one of its lowest multiples since the company's IPO in 2017.
NMI Holdings
- Market value: $2.1 billion
- Analysts' opinion: 5 Strong Buy, 5 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.50 (Strong Buy)
- Median target price: $31.80 (29% implied upside)
Mortgage insurance business NMI Holdings (NMIH, $24.72) was named to Fortune's 2021 list of 100 Fastest-Growing Companies in late November. The private mortgage insurer ranked 35th based on three-year sales, earnings and stock returns. It is the company's second consecutive year making the list.
To get there, NMI generated annualized sales and earnings per share growth of 32% and 63%, respectively, over three years ended March 31, 2021.
On Jan. 1, Chief Financial Officer Adam Pollitzer took the reins as the company's president and CEO. Pollitzer's job as CFO was filled by Ravi Mallela, who comes to the company from First Hawaiian (FHB), where he was also CFO.
In November, NMI's primary operating subsidiary National Mortgage Insurance Corporation completed its integration with OpenClose, a fintech provider of loan origination software. OpenClose provides its customers with a more seamless loan origination process.
"National MI's integration with OpenClose provides lenders with a true end-to-end, multi-channel LOS and application programming interface (API) suite, enabling an efficient mortgage insurance quoting and ordering process," National MI Chief Sales Officer Norm Fitzgerald said in a release.
The company reported its third-quarter results in early November. It finished Q3 with $143.6 million in primary insurance-in-force, which was up from $136.6 million in Q2 2021, and $104.5 million in Q3 2020. Its adjusted net income during the quarter was $61.8 million – 6% sequentially higher than the previous quarter and 53% higher than a year ago.
NMI's business is positioned to take advantage of a resilient housing market. The mid-cap stock traded above $35 per share as recently as December 2019. It appears ready to challenge these levels in 2022.
Shutterstock
- Market value: $3.3 billion
- Analysts' opinion: 2 Strong Buy, 2 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.50 (Strong Buy)
- Median target price: $134.75 (50% implied upside)
Shutterstock (SSTK, $89.75), which provides stock photography, footage and music, worked toward strengthening its business in Q3 2021 by acquiring PicMonkey for $110 million. The online graphic design and image editing platform allows users with minimal skill to create first-rate presentations for digital marketing, advertising and social media posts.
"PicMonkey's easy-to-use design and editing tools, collaboration features across teams, and robust library of pre-designed templates makes professional publishing assets accessible at scale to anyone, and is expected to allow Shutterstock to enhance and accelerate the delivery of our vision for our customers around the world," CEO Stan Pavlovsky said in a September 2021 press release.
Founded in 2012, PicMonkey adds more than new 200,000 customers, boosts its annual revenue by approximately 3% and is immediately accretive to adjusted net income. SSTK believes that its acquisition, combined with the work it has been doing with Shutterstock AI, allows it to provide its customers with a better user experience, which ultimately will help it grow faster.
In its Q3 2021 conference call, Pavlovsky stated that the acquisition enables it to participate in the creative applications marketplace, estimated to be $8 billion annually. It also allows it to use artificial intelligence to help its clients better predict the success of marketing initiatives.
These moves should increase its growth beyond the 5% to 7% annually it generates from its legacy stock content business.
SSTK is also among the best mid-cap stocks you can buy in 2022 because of its financial stability.
"With $300 million in cash and no debt, SSTK upholds an enviable financial position. This strong cash balance and [free cash flow] generation should ensure the sustainability of the company's dividend (raised to 24 cents per share in January 2022 from 21 cents in 2020), with a likely increase further when the company announces 4Q21 results," say Truist Securities analysts, who rate the stock at Buy.
Smartsheet
- Market value: $7.3 billion
- Analysts' opinion: 10 Strong Buy, 4 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.50 (Strong Buy)
- Median target price: $92.07 (59% implied upside)
In early January, Wells Fargo analyst Michael Turrin upgraded Smartsheet (SMAR, $57.83) to Overweight from Equalweight (the equivalents of Buy and Hold, respectively) with a $95 target price, $25 higher than his previous projection. Turrin is in good company, with SMAR boasting a consensus Strong Buy rating from the 16 analysts following it that are tracked by S&P Global Market Intelligence.
Smartsheet's dynamic work platform allows businesses of all sizes to manage their projects, programs and processes. In its 2020 10-K, the company defines dynamic work as "work that has historically been managed using a combination of email, spreadsheets, whiteboards, phone calls and in-person meetings to communicate with team members and complete projects and processes."
SMAR was founded in 2005 and went public in 2018. Its revenues have grown from $178 million in fiscal 2019 to $386 million in fiscal 2021. They're projected to grow to $544 million in 2022. That's a compound annual growth rate of 32%. It expects to hit $1 billion in sales by the end of fiscal 2025. Smartsheet estimates its total addressable market at $58 billion.
In fiscal Q3 2022, Smartsheet had revenue of $144.6 million, 46% higher than a year earlier. During the quarter, SMAR had 14,228 customers generating at least $5,000 in annualized contract values (ACV), 27% higher than in the year prior. In addition, the number of customers generating $50,000 or more in ACV was 2,078, 56% higher year-over-year.
In fiscal 2023, Smartsheet projects that its calculated billings – defined as revenue plus the change in deferred revenue in the period -- will rise by 38.5% at the midpoint of its guidance. While SMAR is currently losing money, it expects to achieve profitability in the foreseeable future.
If you are looking for the best mid-cap stocks, particularly among growthy tech names, Smartsheet ought to be of interest.
Callaway Golf
- Market value: $4.4 billion
- Analysts' opinion: 8 Strong Buy, 2 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.50 (Strong Buy)
- Median target price: $40.33 (69% implied upside)
Jefferies analysts recently called Callaway Golf (ELY, $23.80) one of their highest-conviction consumer sector stock picks for 2022.
"We believe that the market has yet to fully appreciate the Topgolf acquisition," they wrote in a note. "We see a path for this combined business to generate greater than $1 billion in EBITDA over time, which we expect to lead to upside to estimates and multiple expansion."
The golf club and golf ball manufacturer completed its all-stock deal to buy Topgolf in early 2021. The operator of 70 golf entertainment venues in the U.S. and the U.K. has become a major contributor to Callaway's top line.
Specifically, in Q3 2021, Topgolf contributed 39% of the company's overall revenue. Apparel and other gear accounted for 27% of revenue, leaving just 34% for Callaway and Odyssey golf equipment sales. The same-venue sales in the quarter were 100% of 2019 levels, suggesting that ELY's business is returning to pre-Covid levels.
The company's third-quarter results are like night and day from 2020. Year-to-date revenues were $2.42 billion, 99.3% higher than in 2020. On the bottom line, its non-GAAP net income was $173 million, 82.1% higher than in the same period a year earlier.
Overall, Callaway's three segments averaged a segment operating income margin of 14.5%, 170 basis points (a basis point is one-one hundredth of a percentage point) higher than a year ago. While business will likely slow compared to its 2021 growth, the Topgolf business has a runway that should deliver capital appreciation for patient investors looking for the best mid-cap stocks in 2022.
eXp World Holdings
- Market value: $3.9 billion
- Analysts' opinion: 3 Strong Buy, 0 Buy, 1 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.50 (Strong Buy)
- Median target price: $65.33 (76% implied upside)
eXp World Holdings (EXPI, $37.20) has earned a couple of distinctions recently.
For one, eXp Realty, the holding company's largest operating unit, was named to Glassdoor's Best Places to Work list for 2022. It was the realtor's fifth consecutive year to make Glassdoor's rankings. It was also ranked fourth out of 100 large U.S. companies.
While these lists can be very subjective rather than objective, making the list for five consecutive years suggests the corporate culture is generally healthy.
Another indication eXp World Holdings is worthy of a spot on this list of best mid-cap stocks to buy, founder and CEO Glenn Sanford was named the second-most powerful residential real estate executive in the Real Estate Almanac's 2022 list of its Power 200.
The Power 200 points out that Sanford and his management team have grown the company's market cap from $410 million in 2018 to around $4 billion early in 2022. At one point in February 2021, EXPI had a market cap of $11.6 billion.
While eXp World Holdings' momentum has eased since that early 2021 peak, it remains of the top mid-cap stocks for investors to consider given its still-impressive growth.
In its third quarter ended Sept. 30, 2021, the company's sales were $1.1 billion, 97% higher than a year earlier. On the bottom line, its adjusted EBITDA was $23.1 million, up 5.6% year-over-year. And through the first nine months of fiscal 2021, adjusted EBITDA rose 57.4% to $64.9 million, while sales jumped 126.6% to $2.69 billion.
EXPI is a real estate business on the move. It now has more than 69,000 agents on six continents. Investors can expect this to continue to grow in the years ahead.
Deckers Outdoor
- Market value: $8.8 billion
- Analysts' opinion: 9 Strong Buy, 1 Buy, 2 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.42 (Strong Buy)
- Median target price: $474.00 (47% implied upside)
You may be asking why Deckers Outdoor (DECK, $322.15), the maker of UGG, Teva, Hoka and Sanuk footwear, is on this list of the best mid-cap stocks for 2022. Its shares are up just 4.1% over the last 12 months, compared to a roughly 14% return for the entire U.S. market.
However, past performance is not indicative of future resuts, and most of these technical troubles came in the final stretch of 2021 due in part to a lower-than-expected fiscal second-quarter earnings report. But in its fiscal third-quarter report released in early February, DECK bounced back with top- and bottom-line beats.
And on a year-over-year basis, its fiscal Q3 sales rose 10.2% to a record $1.19 billion. This double-digit percentage growth is all the more impressive given the supply-chain issues that hounded retailers during the quarter.
For all of 2022, Deckers expects revenue to grow by 19.5% at the midpoint of its guidance, with EPS of $14.83 at the midpoint – up 10% from fiscal 2021.
Plus, DECK's trailing 12-month free cash flow – the cash remaining after a business has paid its expenses, interest on debt, taxes and long-term investments needed to grow as a company – is $390 million, which translates into an FCF yield of 4.4%. This provides investors with growth at a reasonable price.
The company's Hoka sneaker brand is becoming its key growth driver. In its fiscal third quarter, Hoka sales grew 30.3% year-over-year to $184.6 million, accounting for 15.5% overall, up 2200 basis points from a year ago.
The company has no debt, $998.3 million in cash on its balance sheet and an operating margin of 17.5% at the midpoint of its guidance.
Between UGG and Hoka, DECK has plenty of growth ahead of it in 2022 and beyond.
Digital Turbine
- Market value: $3.9 billion
- Analysts' opinion: 3 Strong Buy, 2 Buy, 0 Hold, 0 Sell, 0 Strong Sell
- Analysts' consensus rating: 1.40 (Strong Buy)
- Median target price: $104.80 (157% implied upside)
Austin-based Digital Turbine (APPS, $40.81) provides proprietary technology that helps publishers and other companies monetize mobile advertising.
In late December, the company announced a strategic partnership with Alphabet's (GOOGL) Google that will accelerate its growth strategy by providing almost one billion Android devices with intelligent app discovery.
"We are thrilled to further deepen and expand our partnership with Google," stated Digital Turbine CEO Bill Stone in a Dec. 28 press release. "By partnering with Google we are efficiently powering app discovery for nearly a billion Android devices globally while simultaneously expanding our footprint across the Android ecosystem including mobile, TV and connected devices."
In addition to APPS being the highest rated among the mid-cap stocks featured here, Roth Capital Partners analyst Darren Aftahi (Buy) believes that Digital Turbine is one of the top tech names for 2022.
"Not only can [Digital Turbine] expand its wallet share on existing devices, it can capture additional upside and long-tail revenues on new devices as well, especially with market expansion outside the U.S. given various partnerships with Samsung, Telefonica and others," Aftahi writes in a note.
In the past 10 years, Digital Turbine has an annualized total return of 27%, nearly double the entire U.S. market.
This momentum is seen in the company's earnings reports, too. In its most recent quarter, APPS increased sales by 63% year-over-year on a pro forma basis to $310.2 million. If you include sales from two acquisitions, it grew sales by 338% during the quarter. Its non-GAAP adjusted EBITDA was $47.9 million, 190% higher than the year prior.
