3 mid-cap stocks to buy for impressive returns this year
Lower inflation rates boost investor confidence. According to Goldman Sachs (GS) analyst Manuel Abacasis, the economy is doing well deceleration, not a recession. Moreover, Wall Street expects slower Fed tightening.
Given the string of positive economic data, the economy may be able to withstand further rate hikes without tipping into a recession. And with stock markets rebounding, it could be better stay invested instead of waiting on the sidelines.
Mid cap companies are assumed to have has successfully passed through the high-risk phase associated with startups. For investors, this could mean a lower level of investment risk. In addition, these companies offer significant growth potential.
Additionally, mid-caps appear to be benefiting from favorable investor sentiment, as evidenced by iShares Core S&P Mid-Cap ETF (IJH) 14.2% returns over the past month, outpacing the S&P 500’s 11.8% gains over that period.
Against this backdrop, we believe fundamentally strong mid-cap stocks Acuity Brands, Inc. (AYI), Hugo Boss S.A. (AUTHORITARIAN) and Progress Software Corporation (PRGS) could be solid buys now for substantial returns this year.
Acuity Brands, Inc. (AYI)
AYI provides lighting and building management solutions in North America and internationally. The Company operates through two segments, Acuity Brands Lighting and Lighting Controls. It has a market capitalization of $6.11 billion.
On June 29, AYI declared a quarterly dividend of 13 cents per share, which was payable to shareholders on August 1. This reflects the company’s ability to return value to its shareholders.
AYI’s net sales increased 17.9% year-on-year to $1.06 billion in the third quarter ended May 31. Its adjusted operating profit rose 19% from the previous year’s value to $162.80 million, while its adjusted net profit improved 20.8% year-on-year. -year at $121.30 million. The company’s adjusted earnings per share rose 27.1% from its value a year ago at $3.52.
The consensus EPS estimate of $3.71 for the fiscal fourth quarter ending August 2022 indicates a 13.5% year-over-year improvement. Consensus revenue for the same period is expected to increase 11.2% from the prior year period to $1.10 billion.
The stock has gained 12% over the past three months and 1.9% over the past five days to close its last trading session at $186.80.
AYI POWR Rankings reflect this promising prospect. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
AYI is rated A in quality and B in growth and value. Within the Home improvement and goods industry, it is ranked #2 out of 22 stocks. To see additional POWR ratings for momentum, stability, and sentiment for AYI, Click here.
Hugo Boss S.A. (AUTHORITARIAN)
BOSSY, headquartered in Metzingen, Germany, develops, markets and distributes clothing, footwear and accessories for men and women. Under its BOSS and HUGO brands, the company offers business wear, casual wear, footwear and accessories, licensed products, as well as children’s fashion products. It has a market cap of $4.06 billion.
On July 19, BOSSY announced an extension of its BOSS Kidswear licensing agreement with CWF Group to the HUGO brand via HUGO BOSS Trade Mark Management GmbH & Co. KG. The exclusive license should cover the design, production and distribution of a HUGO Kids collection. The license extension should benefit the company.
BOSSY’s sales were €878 million ($890.26 million) for the second quarter of 2022, representing year-over-year growth of 39.6%. His EBIT increased 138.1% from the prior year quarter to 100 million euros ($101.40 million), while its net profit increased 140% from the same period last year to reach 60 million euros ($60.84 million). EPS increased by 144.1% compared to the same period of the previous year, to €0.83.
Analysts expect BOSSY’s revenue for the third quarter ending September 2022 to be $884.55 million, indicating 1.3% year-over-year growth.
BOSSY has gained 11.7% over the past three months and 5.1% over the past month to close its latest trading session at $11.68.
It’s no surprise that BOSSY has an overall A rating, which translates to a strong buy in our POWR rating system. The stock has an A rating for quality and a B for growth, value and stability. It is ranked #2 out of 67 stocks in the Fashion & Luxury industry.
Beyond what we stated above, we also gave BOSSY ratings for Momentum and Sentiment. Get all BOSSY reviews here.
Progress Software Corporation (PRGS)
PRGS engages in the development, deployment and management of business applications. The company offers its products to end users, ISVs, original equipment manufacturers and system integrators. It has a market cap of $2.22 billion.
On June 21, the PRGS Board of Directors announced a dividend of $0.175 per share, payable September 15. This reflects the company’s cash-generating capacity. Anthony Folger, Chief Financial Officer, said, “Despite recent challenges in the global economy, our business continues to perform well across virtually all product lines.”
In June, PRGS announced the release of Progress Flowmon, a network visibility and security solution. The solution should strengthen the company’s capabilities in the field of hybrid cloud environment.
For the fiscal second quarter ended May 31, 2022, PRGS adjusted revenue increased 16.8% year-over-year to $150.88 million. Its non-GAAP operating income increased 23.3% from the prior year period to $61.30 million. Non-GAAP net income and non-GAAP net income per share were $45.89 million and $1.04, up 25.7% and 26.8% from the previous year. period of the previous year.
The Street EPS estimate for the fourth fiscal quarter (ending November 2022) of $1.10 reflects a 20.1% year-over-year increase. Similarly, Street’s revenue estimate for the same quarter of $165.19 million indicates a 14.9% improvement over the prior year period. Additionally, PRGS has exceeded consensus EPS estimates in each of the past four quarters.
Over the past year, PRGS stock has gained 16.4% to close its last trading session at $51.13. It has gained 5.9% since the start of the year.
This promising outlook is reflected in PRGS’s POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system. PRGS has an A rating for quality and a B rating for growth and value. It is ranked #3 out of 154 stocks in the Software app industry.
Click here to see additional POWR ratings for PRGS (Momentum, Stability, and Sentiment).
AYI shares were trading at $182.95 per share on Friday afternoon, down $3.85 (-2.06%). Year-to-date, the AYI is down -13.40%, compared to a -10.54% rise in the benchmark S&P 500 over the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and her passion for writing made Kritika an analyst and financial journalist. She earned her Bachelor of Commerce degree and is currently pursuing the CFA program. With its fundamental approach, it aims to help investors identify untapped investment opportunities. After…