On February 7, Simeon Hyman, Global Investment Strategist at ProShares Advisors, appeared on CNBC to discuss the upcoming jobs report and its expected impact on the market. He believes that the market will hold up, and particularly cites mid-cap stocks as an optimal balance for risk and return. He noted that the economy has shown strength in various sectors, such as the ISM manufacturing index, which recently beat expectations. This broadening of economic growth suggests that the jobs numbers might be decent. Hyman also highlighted the positive earnings growth in the S&P 500, with about three-quarters of companies reporting a 12% year-over-year increase, which is encouraging news.
Recently, the mega-cap tech stocks have shown some weakness despite the overall market being on pace for a winning week. Hyman observed that while this broadening of market performance is positive, it also indicates risk, given that the tech sector still accounts for over 30% of the S&P 500 and remains in the red for the year. His word of the day was mid-caps, which he believes are historically the sweet spot in the market. Mid-caps have outperformed both large and small-cap stocks over the decades. Currently, mid-caps are undervalued, offering investors about $0.50 on the dollar, a situation that hasn’t occurred with small caps despite their underperformance. The key advantage of mid-caps is their earnings growth, which sets them apart from small-caps. When discussing mid-caps versus small caps, Hyman highlighted that mid-caps also have a strong domestic focus, with about 75% of their revenues coming from domestic sources. This is similar to small caps but with a crucial difference: mid-caps generally offer higher quality than small caps, lacking the losses and negative earnings often seen in small-cap companies. This makes mid-caps an attractive option for investors looking for stable growth.
Therefore, we’re here with a list of the 10 best-performing mid-cap stocks to buy according to analysts.
Methodology
We used the Finviz stock screener to compile a list of the best-performing mid-cap stocks that were trading between $2 billion and $10 billion. We then picked the top 10 stocks with year-to-date gains higher than 20% and an average upside potential of over 25%. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
Note: All data is as of February 24.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Performing Mid Cap Stocks to Buy According to Analysts
10. Mirum Pharmaceuticals Inc. (NASDAQ:MIRM)
Year-to-Date Performance as of February 24: 23.24%
Upside Potential as of February 24: 27.01%
Number of Hedge Fund Holders: 38
Mirum Pharmaceuticals Inc. (NASDAQ:MIRM) develops treatments for rare and debilitating diseases, with a focus on liver conditions. Its portfolio includes the approved drug LIVMARLI for Alagille syndrome, as well as other commercialized therapies and promising candidates that target various cholestatic liver diseases.
LIVMARLI generated $59.1 million in global sales during Q3 2024. This is a significant portion of the company’s overall product sales of $90.3 million. The US market contributed $43.5 million to LIVMARLI’s revenue, while international sales reached $15.6 million. A key factor here was the increased adoption of LIVMARLI for Progressive Familial Intrahepatic Cholestasis (PFIC), particularly in the US. The faster-than-anticipated reimbursement process has accelerated patient uptake.
The company is working to expand LIVMARLI’s potential through the Phase 3 EXPAND study, which is evaluating its effectiveness in treating Cholestatic Pruritus. Sites for this study are now open and screening patients. Mirum Pharmaceuticals Inc. (NASDAQ:MIRM) anticipates that patient enrollment will continue for about 18 months, which will broaden LIVMARLI’s application to a larger patient group. LIVMARLI’s international expansion is also progressing well, with approvals secured in major European Union markets for Alagille Syndrome.
ClearBridge Small Cap Growth Strategy invested in Mirum Pharmaceuticals Inc. (NASDAQ:MIRM) due to its stable commercial operations, near-breakeven cash flow, and promising potential for growth through label expansions and new drug candidates. It stated the following in its Q4 2023 investor letter:
“In the fourth quarter we initiated four new investments: Inari Medical, Blackbaud, Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM) and Installed Building Products. Mirum Pharmaceuticals is a commercial stage pharmaceutical company primarily treating rare liver conditions, often in pediatric patients. With multiple approved marketed products across different indications, the company is already operating near cash[1]flow breakeven. Mirum is pursuing label indication expansions across two of its marketed products that could be materially additive to the growth trajectory, along with two promising Phase 2 candidates designed to treat several adult rare liver diseases.”
9. SpringWorks Therapeutics Inc. (NASDAQ:SWTX)
Year-to-Date Performance as of February 24: 55.63%
Upside Potential as of February 24: 28.00%
Number of Hedge Fund Holders: 40
SpringWorks Therapeutics Inc. (NASDAQ:SWTX) is a commercial-stage biopharmaceutical company that develops therapies for rare diseases and cancer. Its lead product, OGSIVEO, targets desmoid tumors and it has a pipeline of MEK and BRAF inhibitors that are aimed at various solid tumors.
In Q3 2024, OGSIVEO generated $49.3 million in net product revenue, which was a 23% sequential increase. This growth was fueled by the demand from new and existing patients who experienced clinical benefits. The OGSIVEO launch has been highly successful, positioning it as the standard systemic therapy for desmoid tumors. Market research indicates significant growth potential, as only a fraction of eligible patients have been reached by now. The introduction of new tablet strengths and blister packaging has improved patient convenience and adherence.
In September, over 800 patients filled OGSIVEO prescriptions, and 65% have transitioned to blister packs, which improves refill predictability. The estimated patient population has increased from 5,500-7,000 to ~10,000, based on new diagnosis code data. OGSIVEO is prescribed at 420 treatment centers, with 57% of prescribers in community settings. Physician feedback highlights OGSIVEO’s efficacy and tolerability, with 90% intending to use it as frontline treatment. 60% of physicians expect to increase their OGSIVEO usage. Global expansion is also underway, with EU regulatory reviews and planned launches in Europe and Japan. Long-term data shows continued tumor reduction and symptom relief with OGSIVEO. SpringWorks Therapeutics Inc. (NASDAQ:SWTX) is confident in its continued growth.
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