15 Mighty Mid-Cap Stocks to Buy for the Rest of 2022

Blue Owl Capital

• Market value: $4.8 billion
• Analysts' opinion: 3 Strong Buy, 3 Buy, 2 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.88 (Buy)
• Median target price: $13.38 (19.0% implied upside)

It's been a little more than a year since Blue Owl Capital (OWL (opens in new tab), $11.24) was formed through the combination of Dyal Capital Partners, Owl Rock Capital Group, and Altimar Acquisition, a special purpose acquisition company (SPAC).

Dyal specializes in minority equity investments in alternative asset management firms. It's been doing this since 2010, and, since its founding, has acquired $41.2 billion in assets under management (AUM). It has also completed more than 65 equity and debt transactions.

Owl Rock provides loans to middle and upper-middle-market businesses. It's been in the lending game since 2016, and has $44.8 billion AUM. Since its inception, it has originated more than $56 billion in loans through its business.

Blue Owl's third platform for growth is Oak Street, which was founded in 2009. It specializes in both direct and indirect real estate investing. It currently has $16.1 billion AUM and has completed more than 115 transactions since its founding.

In May, OWL held its annual Investor Day. Three things stand out about its presentation.

The first is how much growth is on the table. In 2021, Blue Owl had $900 million in fee-related revenues. By 2023, it expects to double that to $1.8 billion. In terms of after-tax distributable earnings, it plans to double them as well, to $1.0 billion in 2023 from $523 million in 2021. Lastly, it wants to boost its annualized dividend by 40 cents per share (where it was in Q4 2021) to $1 per share in 2023.

The second highlight is how much of an impact fee-related revenues have on its profitability. These revenues have 60% margins. In other words, Blue Owl's distributable earnings are completely driven by fee-related revenues.

Lastly, with just 23% of its investor base outside North America, its global expansion is in the early stages with much growth to come in the years ahead.

With its goal to raise more than $50 billion in fee-related AUM over the next 18 months, there's no question growth is on the table for the foreseeable future. That's what makes OWL one of the best mid-cap stocks for the rest of 2022 and beyond.

Performance Food Group

• Market value: $7.9 billion
• Analysts' opinion: 7 Strong Buy, 6 Buy, 3 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.75 (Buy)
• Median target price: $61.50 (20.6% implied upside)

Performance Food Group (PFGC (opens in new tab), $50.99) is a Virginia-based foodservice distribution company. It is one of the largest in North America, delivering more than 150,000 products from 150 locations across the U.S. and Canada. The company distributes products through three operating segments: Foodservice, Convenience and Vistar.

Foodservice sells both brand name products and Performance Brands items to independent and multi-unit restaurant chains, as well as to institutional settings like healthcare facilities and schools. It generated 51% of the company's $13.08 billion in sales in the company's fiscal third quarter (ended April 2).

PFGC's Convenience business distributes snacks, candy, beverages and cigarettes to convenience stores in the U.S. and Canada. It's responsible for 43% of Performance's overall revenue. And Vistar specializes in distributing these same products to movie theaters, retail, etc. It made up the remaining 6% of sales over the three-month period.

In terms of EBITDA (earnings before interest, taxes, depreciation and amortization) margins, PFGC's two largest segments make a little from a lot of customers. Vistar, while small, has margins double those of its two larger operating segments. This will help continue to build out the Vistar division.

"At Vistar, we are incredibly pleased with the sequential improvement that business is experiencing," said George Holm, CEO of Performance Food Group, during the company's earnings call. "As you know, a strong recovery at Vistar, which is what we are expecting, would prove to be very favorable to our margin profile in the quarters ahead."

The company's convenience store segment got a big boost in September 2021, when it completed its $2.5 billion acquisition of Core-Mark Holding, one of the largest wholesale distributors in the convenience store space in North America.

Performance is building a trifecta of growth – and this is what makes it one of the best mid-cap stocks for the rest of 2022 and beyond.

Shockwave Medical

• Market value: $7.2 billion
• Analysts' opinion: 4 Strong Buy, 1 Buy, 2 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.71 (Buy)
• Median target price: $213.00 (5.2% implied upside)

Shockwave Medical (SWAV (opens in new tab), $202.53) got an official mid-cap endorsement from S&P Dow Jones Indices on June 6. The index provider added the medical device company to the S&P MidCap 400. SWAV, along with Sotera Health (SHC (opens in new tab)), replaced Urban Outfitters (URBN (opens in new tab)) and LiveRampHoldings (RAMP (opens in new tab)), which joined the S&P SmallCap 600.

SWAV stock jumped more than 13% on the news. It's a big deal getting added to an index.

Shockwave's developing and commercializing a proprietary local delivery of sonic pressure waves to treat calcified plaque on a person's heart arteries. The company refers to this treatment as intravascular lithotripsy (IVL). Its IVL system and technology is minimally invasive and improves patient outcomes.

While Shockwave got its start in 2009, it has really hit the ground running over the past two years.

In 2020, its M5 IVL catheter – which treats peripheral artery disease (PAD) – was given approval by European regulators. A year later in April 2021, it was cleared by the U.S. Food and Drug Administration (FDA). The company's C2 IVL catheter, which is used for the treatment of coronary artery disease (CAD), was given pre-market approval by the FDA in February 2021.

And recent news about product approvals came on May 23. Shockwave announced that China's National Medical Products Administration (NMPA) has given the company permission to sell its Shockwave IVL System in the mainland. Included in the approval were its C2 Coronary IVL catheters, its M5 IVL catheters and S4 Peripheral IVL catheters.

Shockwave has partnered with Genesis MedTech to sell its IVL system and products in China. The country's aging population makes it an excellent future growth target for the joint venture.

As for its financials, Shockwave's revenue in Q1 2022 was $93.6 million, nearly triple what it was the year earlier. It generated a $15.4 million operating profit in the three-month period, compared to a $17.5 million loss in Q1 2021.

Following its Q1 results, management boosted its full-year revenue guidance by $30 million, now expecting sales to reach at least $435 million in 2022 – 83% higher than in 2021.

Shockwave joined the S&P MidCap 400 at just the right time in its growth trajectory.

Crestwood Equity Partners

• 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: $37.00 (39.7% implied upside)

Crestwood Equity Partners (CEQP (opens in new tab), $26.48) is publicly-traded master limited partnership (MLP) that owns and operates midstream assets in several areas, including the Williston Basin, Delaware Basin and Marcellus Shale.

Because of the MLP structure, Crestwood's annualized distribution of $2.62 per share, yields a healthy 10.2%. However, the distributions are treated as a return on capital, which reduces your cost basis. In other words, you're deferring income today for higher capital gains taxes tomorrow. Always be sure to consult a tax expert if unsure about your personal situation.

In fiscal 2022, the MLP expects distributable cash flow between $500 million and $560 million, free cash flow after distributions of at least $75 million, and adjusted EBITDA of $810 million at the midpoint of its guidance.

Approximately 75% of its 2022 EBITDA will be generated by its Gathering & Processing North segment, which is primarily made up of Williston Basin assets in North Dakota and Eastern Montana. Its processing capacity is 430 million cubic feet per day of natural gas.

One reason Crestwood is on this list of the best mid-cap stocks is that the MLP generates 83% of its cash flow from fixed-fee or take-or-pay contracts that are backed by more than 1.7 million dedicated acres. So if a producer drills a new well within this acreage, they're required to use Crestwood's assets.

Further, most of these contracts have inflation escalators for times like we're currently experiencing. Equally important, the customers signing these contracts and utilizing its gathering and processing assets are some of the biggest producers in the energy industry. Its diversification of customers is second to none.

If you want sexy, Crestwood is probably not for you.

Graphic Packaging Holding

• Market value: $6.5 billion
• Analysts' opinion: 10 Strong Buy, 4 Buy, 1 Hold, 0 Sell, 1 Strong Sell
• Analysts' consensus rating: 1.63 (Buy)
• Median target price: $26.00 (23.8% implied upside)

You might not be familiar with Graphic Packaging Holding (GPK (opens in new tab), $21.00), but you've probably seen or used some of their products. As its name suggests, GPK is in the packaging business. Its products include folding cartons, solid bleached sulfate paperboard, coated unbleached kraft paperboard and coated-recycled paperboard.

One product GPK created in 2019 is the KeelClip. It's a paper-based sustainable packaging product that allows drink manufacturers to sell six-packs of beverages without those plastic rings that are both harmful to the environment and bird wildlife. The demand for this kind of product is significant.

Most importantly, its customer list reads like a who's who of the S&P 500 – including Coca-Cola (KO (opens in new tab)) and PepsiCo (PEP (opens in new tab)). That means stable, recurring revenue.

In Q1 2022, the company reported $2.25 billion in sales, 36.1% higher than a year earlier. Excluding its acquisition of Americraft Carton and AR Packaging in Q3 2021 and Q4 2021, respectively, organic sales were 3% higher year-over-year. And Graphic Packaging's adjusted net income was $149 million, 96.1% higher than a year earlier.

Like most companies, GPK is dealing with high inflation. In 2021, it had $330 million in added costs due to inflation. In the first quarter of 2022, inflation cost the company an additional $176 million in costs. For the remainder of 2022, it expects inflation will contribute between $450 million and $650 million in added costs.

Fortunately, Graphic Packaging has been able to raise prices to cover these additional costs.

In 2021, it added $150 million in revenue from price increases, resulting in $180 million in net extra costs. In 2022, it added $222 million in revenue via price increases through the first quarter. It expects to be able to add $850 million through the end of this year, which could result in $200 million-$400 million in additional gross profits in 2022.

According to S&P Global Market Intelligence, Graphic Packagaing's EBITDA margin is 14.9%, higher than it's been since 2019. The company's intent is to grow this to 18%-20% by 2025.

Jazz Pharmaceuticals

• Market value: $9.8 billion
• Analysts' opinion: 9 Strong Buy, 8 Buy, 2 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.63 (Buy)
• Median target price: $200.00 (28.0% implied upside)

Jazz Pharmaceuticals (JAZZ (opens in new tab), $156.15) has come a long way since it was founded in 2002. Acquisitions have played a big part in its growth over the past two decades. The most recent was its $7.2 billion purchase of GW Pharmaceuticals in May 2021.

The cash-and-stock transaction broadened the company's product offerings for its neuroscience business. GW's Epidiolox was approved for the treatment of seizures related to severe forms of epilepsy in the U.S. in June 2018. The European Commission approved it in September 2019. The drug gained interest from investors because it is made with highly purified plant-derived cannabidiol (CBD).

In the first quarter of 2022, Epidiolox had sales of $157.9 million, 6% higher than a year earlier. Excluding a roughly $18 million gain in Q4 2021 due to specialty pharmacy inventory buildups, which reversed in Q1 2022, the drug's sales increased by double digits over last year.

The other big drug in Jazz's neuroscience lineup is Xywav. It is an oral treatment for narcolepsy and idiopathic hypersomnia. In the first quarter, Xywav had sales of $186.1 million, 147% higher than Q1 2021.

But JAZZ isn't a one-trick pony. It's also seeing tremendous growth on the oncology side of its business. Rylaze, which is used in the treatment of acute lymphoblastic leukemia (ALL), had $54.22 million in sales in the first quarter, compared to no sales a year earlier. The cancer medicine was launched in July 2021, and accounted for almost 7% of JAZZ's total sales in Q1.

For all of 2022, Jazz expects adjusted net income between $1.18 billion and $1.25 billion, with revenue of $3.6 billion at the midpoint of its guidance.

Denbury

• Market value: $3.0 billion
• Analysts' opinion: 7 Strong Buy, 3 Buy, 0 Hold, 1 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.55 (Buy)
• Median target price: $88.00 (40.3% implied upside)

Denbury (DEN (opens in new tab), $62.72) is the first of two energy names featured on this list of the best mid-cap stocks for the rest of 2022. DEN operates along the Gulf Coast and Rocky Mountain regions of the U.S., with estimated proved oil and gas reserves of approximately 191.7 million barrels of oil equivalent (MMBOE). It operates in the Gulf Coast and Rocky Mountain regions of the U.S.

DEN gained an excellent reputation in the industry because of its world-leading carbon solutions, such as CO2 Enhanced Oil Recovery (EOR) and direct CO2 injection. In the three years from 2018 through 2020, it used 3 million metric tons of CO2 to help produce oil that otherwise would have gone into the atmosphere. Over that time span, it had net negative CO2 emissions of approximately 1.2 million metric tons.

One of Denbury's main priorities in 2022 is to generate substantial free cash flow, the money a company generates after covering the capital expenditures needed to grow its business. That won't be as easy as it sounds, even in this oil crazy environment we're in. That's because it's investing up to $320 million on the development of exploration and production projects – more than three times what it invested in 2020 and 27% more than in 2021.

Still, the energy company's fundamentals are on solid footing. In the first quarter of 2022, Denbury's revenue was $411.9 million, 64% higher than a year earlier. On the bottom line, its adjusted net income was $93.2 million, compared to $22 million in Q1 2021.

For all of 2022, Denbury is guiding for production of 47,500 barrels of oil equivalent per day. And it's hedging up to half its daily production through the use of NYMEX fixed-price swaps and costless collars, cutting it back to 9,000 BOE/D by the second half of 2023.

The downside to these hedges is that the oil and gas stock loses out on some of the current upside, which in today's price environment is a tough pill to swallow. However, minimum hedges were a condition of its Bank Credit Agreement when it emerged from bankruptcy in September 2020.

Axos Financial

• Market value: $2.4 billion
• Analysts' opinion: 5 Strong Buy, 2 Buy, 1 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.50 (Strong Buy)
• Median target price: $51.50 (29.5% implied upside)

Las Vegas-based bank Axos Financial (AX (opens in new tab), $39.77) is continuing to make waves in 2022. In May, subsidiary Axos Bank saw its Business Interest Checking account named America's Best Business Checking Account Overall by WalletHub – the second year in a row it achieved this honor. The site's editors evaluated more than 250 small business checking and saving accounts before determining Axos has the best of the bunch.

If you care about consistent growth, AX certainly delivers. Its fiscal third-quarter earnings report included a 10.2% year-over-year increase in net interest income and a 20.5% rise in non-interest income. Overall, its adjusted net earnings were up 15.2% in the three months ended March 31 to $63.8 million. Its tangible book value per share was up 15% over Q1 2021 to $23.51.

Additionally, Axos Financial had $16.1 billion in total assets at the end of the third quarter, 8.5% higher than a year earlier. Total deposits arrived at $12.7 billion, with loans of $13.1 billion.

The company's biggest revenue generators are single family and multifamily mortgages, along with commercial real estate loans. The allowance for credit losses on all three of these loan products remains low.

And Wall Street pros don't expect the financial stock to slow down anytime soon. According to S&P Global Market Intelligence, analysts expect revenue to reach $871.9 million in 2024, up from $644 million in fiscal 2021.

AX is down nearly 29% for the year-to-date. But considering shares have an annualized return of roughly 23% over the past 10 years, the recent slip just creates an opportunity to pick up one of the best mid-cap stocks at a discount.

Flex

• Market value: $7.0 billion
• Analysts' opinion: 5 Strong Buy, 2 Buy, 1 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.50 (Strong Buy)
• Median target price: $23.00 (49.8% implied upside)

If you need something made, Flex (FLEX (opens in new tab), $15.35) is the company to go to get it done. FLEX services several industries including cloud, communications, automotive, industrial and consumer devices. Its 10 largest customers account for 34% of its revenue. However, none represents more than 10%.

In the company's fiscal 2022 ended March 31, its revenues increased by 8% to $26 billion. It also brought in record adjusted earnings per share of $1.96. FLEX continues to focus on high-growth areas that will enable it to strengthen its margins over the long haul.

One segment that's growing particularly fast for the company is Nextracker. This California-based subsidiary of Flex makes smart solar trackers that are operating or in development, and are capable of generating 50 gigawatts of power generation. In 2022, Nextracker generated $1.5 billion in revenue (6% of Flex's total), 21.9% higher than a year earlier. It's got a long way to catch up with some of FLEX's other segments, but it's coming along.

In February, Flex sold Series A preferred units in Nextracker to TPG's renewables and climate fund. The capital raised valued Nextracker at $3.0 billion. Flex is exploring an initial public offering (IPO) for the unit, but the markets are not cooperating.

Flex expects more growth ahead, and is guiding for $28.2 billion in revenue and $2.17 in adjusted earnings per share for fiscal 2023. Based on its current share price, it's trading at around 7x adjusted earnings.

That's value with a capital V.

Nexstar Media Group

• Market value: $7.3 billion
• Analysts' opinion: 7 Strong Buy, 1 Buy, 2 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.50 (Strong Buy)
• Median target price: $206.50 (14.4% implied upside)

Who says network television is dead? Shares of Nexstar Media Group (NXST (opens in new tab), $180.49) are up 19.6% for the year-to-date, compared to a 16.9% decline for the S&P 500.

Nexstar owns, operates or provides services to 200 broadcast stations in 116 markets across the U.S. These stations access 68% of the country's television households. It focuses on local markets with affiliated stations to all the major networks.

In the first quarter, NXST's core advertising revenue increased 4% year-over-year to $428.1 million. Its other advertising revenue stream of political ads is starting to pick up as we head to November's midterm elections. Political advertising revenue jumped 339% in Q1, and investors can expect this to continue through the fourth quarter.

Another reason Nexstar is one of the best mid-cap stocks for the rest of 2022: It is a cash-generating machine, with free cash flow up 15.9% in Q1 to $560.4 million – the most ever on a quarterly basis. NXST used almost 35% of its free cash on dividends and share repurchases; another 28% went to debt repayment. The company expects to generate more than $1.4 billion in free cash flow over the next 12 months.

Looking back over the last 12 months ended March 31, NXST used 43% of its free cash flow for stock buybacks, repurchasing 917,923 shares in Q1 alone at an average price of $172.21 per share. That's about where it's currently trading. With $480.1 million left on its share repurchase authorization, it likely bought some in the second quarter when share prices dipped into the low $150s.

There's plenty of growth opportunity on the horizon for Nexstar, including with its digital revenue. In the 12 months ended Dec. 31, digital contributed just 8% of Nexstar's overall sales. That's got to be better.

Five Below

• Market value: $6.9 billion
• Analysts' opinion: 13 Strong Buy, 5 Buy, 2 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.45 (Strong Buy)
• Median target price: $160.00 (27.8% implied upside)

In its 20-year history, Five Below (FIVE (opens in new tab), $125.18) has grown to more than 1,200 stores in 40 states. It sells items priced between $1 and $5, as well as some items costing more than five bucks.

Like a lot of retailers, inflation is wreaking havoc with its business. On June 8, FIVE reported its first-quarter results. While sales were up 7% year-over-year, they were softer than expected. Additionally, same-store sales fell 3.6%. However, Five Below managed to deliver net income of $32.7 million, which was in the ballpark of its guidance for the quarter.

However, the company's guidance for fiscal 2022 wasn't all that encouraging. It cut its revenue for the year to $3.08 billion at the midpoint of guidance, down from $3.21 billion previously. On the bottom line, it now expects $5.05 a share, compared to its prior outlook for earnings of 40 cents per share.

As a result of this guidance cut, BofA Global Research analyst Jason Haas lowered his price target by $50 to $200. That still provides plenty of upside potential over the next 12 months. Haas does feel another guidance cut could be in the cards before the end of December, but he remains bullish about the retailer's long-term guidance.

FIVE's "key growth driver" is new stores, said Joel Anderson, CEO of Five Below, in the company's Q1 earnings call. Over that three-month period, the company opened across 23 states. It expects to open 160 new stores total in 2022 and 200 in 2023.

While pressure facing consumers "due to the reduction in stimulus in the current inflationary environment weigh on our near-term results, history has taught us that consumers will seek out value even more when times are tough, and nobody is better positioned to deliver fun at outstanding values than Five Below," Anderson added.

Five Below went public a decade ago at $17 a share. The retail stock has gained nearly 640% since. The S&P 500 is up about 190% over the same period.

XPO Logistics

• Market value: $6.2 billion
• Analysts' opinion: 15 Strong Buy, 7 Buy, 1 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.39 (Strong Buy)
• Median target price: $75.00 (38.1% implied upside)

It's been roughly a year since XPO Logistics (XPO (opens in new tab), $54.30) spun off GXO Logistics (GXO (opens in new tab)). Now, the Connecticut-based freight transportation company wants to do it again. In March, it announced a plan to separate its less-than-truckload (LTL) business from its freight brokerage unit, likely in Q4 2022.

The announcement also included XPO's plans to sell both its European transportation business and its North American intermodal operation. In 2021, these two businesses generated combined revenue of $4.4 billion, employing more than 14,000 people total.

The company's tech-enabled brokerage services will be based out of Charlotte, North Carolina. In 2021, this segment generated revenue of $4.8 billion and $226 million in operating income. It's also been a growth machine. Over the past eight years, sales rose 27% compounded annually.

As for its LTL business, it had 2021 revenue of $4.1 billion and $618 million in operating income. However, the entire XPO business has rightly or wrongly been given a conglomerate-type discount. The spinoff will make it easier for investors to evaluate each division as its own publicly traded company. In addition, capital allocation decisions will be made more easily as separate, independent businesses.

"We believe that by separating these businesses, we can significantly enhance value creation for our customers, employees and shareholders," said Brad Jacobs, CEO of XPO Logistics, in the March press release announcing the spinoff. "Our two core businesses of North American less-than-truckload and tech-enabled truck brokerage are industry-leading platforms in their own right, each with a distinct operating model and a high return on invested capital," he added.

The separation is expected to occur in the fourth quarter of 2022. For now, investors have the chance to pick up one of the best mid-cap stocks on the cheap. XPO is currently trading at 10.3 times forward earnings, well below its five-year average of 27.3.

ACI Worldwide

• Market value: $3.1 billion
• Analysts' opinion: 5 Strong Buy, 1 Buy, 0 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.17 (Strong Buy)
• Median target price: $37.50 (37.4% implied upside)

ACI Worldwide (ACIW (opens in new tab), $27.29) provides software products and solutions for real-time digital payments to 6,000-plus global organizations, including more than 1,000 of the world's largest financial institutions.

In Q1 2022, ACIW posted a 49% year-over-year jump in adjusted EBITDA to $67.6 million. The company also had revenue of $323.1 million, 14% higher than Q1 2021. Recurring revenue in the first quarter accounted for 76% of its overall sales. Most of its recurring revenue was from software-as-a-service (SaaS) and platform-as-a-service (PaaS) fees. The company's SaaS and PaaS revenues accounted for 60.2% of its overall sales in Q1 2022.

For all of 2022, ACI Worldwide expects sales of $1.43 billion and adjusted EBITDA of $407.5 million at the midpoint. Analysts expect sales to grow to $1.5 billion in 2023, with $229.9 million in free cash flow and $260.95 million in adjusted net income.

Helping boost ACI's future financial results will be its new partnership with NORBr, a global fintech platform. NORBr's payment services marketplace connects digital merchants with payment providers in the countries where its customers are located, allowing these vendors to more easily complete order fulfillment from their websites.

Like so many other tech stocks, ACIW has been hit by broad-market headwinds, and is off roughly 21% for the year-to-date. However, that allows investors to pick up one of the best mid-cap stocks at a discount. Case in point: Shares are currently trading at 2.3 times sales, considerably less than the five-year average of 3.0x.

Churchill Downs

• Market value: $8.1 billion
• Analysts' opinion: 6 Strong Buy, 0 Buy, 0 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.00 (Strong Buy)
• Median target price: $281.00 (31.1% implied upside)

Churchill Downs (CHDN (opens in new tab), $214.29) is best known for hosting the Kentucky Derby horse race each year. However, it also operates brick-and-mortar casinos in eight states, as well as the Twin Spires online wagering platform for betting on horse races.

Churchill Downs has "a unique collection of entertainment assets that generate significant adjusted EBITDA and free cash flow," the company states in its March 2022 investor presentation.

This was certainly evident in the company's first-quarter results that included record revenue, income and adjusted EBITDA. All three of its reporting segments experienced year-over-year adjusted EBITDA growth over the three-month period.

In the first quarter, CHDN also announced it is buying nearly all of Peninsula Pacific Entertainment's assets for $2.5 billion. The purchase price includes all of Peninsula Pacific's Virginia-based racing entertainment venues and its del Lago Resort & Casino in New York, as well as the operations side of the Hard Rock Hotel & Casino in Iowa.

Churchill Downs expects the acquisition, which is expected to close by the end of 2022, to be immediately accretive to free cash flow and net income. It is funding the transaction with new debt and cash on its balance sheet.

For all of fiscal 2022, analysts expect CHDN to report earnings-per-share and revenue growth of 23.9% and 9.4%, respectively. And in fiscal 2023, this growth is forecast to ramp up to 64.5% and 36.6%, respectively.

This makes Churchill Downs one of the best mid-cap stocks for the rest of 2022 and beyond.

MillerKnoll

• Market value: $2.2 billion
• Analysts' opinion: 3 Strong Buy, 0 Buy, 0 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus rating: 1.00 (Strong Buy)
• Median target price: $50.50 (76.5% implied upside)

In April 2021, Herman Miller announced that it would acquire rival office furniture maker Knoll for $1.8 billion in cash and stock. Upon completion of the acquisition, the merged entity became MillerKnoll (MLKN (opens in new tab), $28.61). A key objective of the combined businesses is to grow retail and contract channels.

The merger almost never happened. While the acquisition was announced after six months of negotiations, Knoll had previously entertained an offer from a European private equity firm that fell apart when COVID-19 took hold in early 2020. While Knoll didn't sell, it became serious about finding a friendly buyer because it was running out of cash.

Several offers and counteroffers ensued between Herman Miller and Knoll starting in November 2020 after Goldman Sachs contacted the latter about considering a sale. Herman Miller's first offer was for $1.42 billion, paid entirely with stock. Knoll rejected that and ended negotiations. Nonetheless, Herman Miller came back with a second bid in February 2021, and ultimately, secured a deal that spring.

The merger has been fruitful for the combined firm. In late March, MLKN announced fiscal third-quarter results that included a 31.5% year-over-year increase in orders to $1.1 billion. Plus, its backlog increased 169.3% over the three-month period to $1.02 billion. MillerKnoll expects to generate $120 million in annual cost synergies by July 2024.

And analysts are quite enthusiastic that MLKN will remain one of the best mid-cap stocks for 2022 and beyond. The pros expect the company to grow its sales to $5.1 billion by fiscal 2025 with adjusted net income of $406.6 million. Those figures are both considerably higher than what the company reported in fiscal 2022.