Mid-cap stocks have the best odds of scaling into $100 billion corporations thanks to their tested business models and large addressable markets. But the many opportunities in front of them attract significant competition, spanning from industry behemoths with seemingly infinite resources to small, nimble players with chips on their shoulders.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here are three mid-cap stocks to avoid and some other investments you should consider instead.
Charter (CHTR)
Market Cap: $26.77 billion
Operating as Spectrum, Charter (NASDAQ: CHTR) is a leading telecommunications company offering cable television, high-speed internet, and voice services across the United States.
Why Do We Avoid CHTR?
- Demand for its offerings was relatively low as its number of internet subscribers has underwhelmed
- Stagnant returns on capital show management has failed to improve the company’s business quality
Charter’s stock price of $213.91 implies a valuation ratio of 4.9x forward P/E. Check out our free in-depth research report to learn more about why CHTR doesn’t pass our bar.
Quest (DGX)
Market Cap: $21.45 billion
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE: DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Why Are We Wary of DGX?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 3.2% for the last five years
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 7.8 percentage points
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 2.4% annually
Quest is trading at $195.43 per share, or 18.3x forward P/E. If you’re considering DGX for your portfolio, see our FREE research report to learn more.
Cincinnati Financial (CINF)
Market Cap: $24.67 billion
Founded in 1950 by independent insurance agents seeking stable market options for their clients, Cincinnati Financial (NASDAQ: CINF) provides property casualty insurance, life insurance, and related financial services through independent agencies across 46 states.
Why Does CINF Give Us Pause?
- Earnings per share lagged its peers over the last two years as they only grew by 14.7% annually
- Estimated book value per share growth of 4.3% for the next 12 months implies profitability will slow from its two-year trend
At $159.50 per share, Cincinnati Financial trades at 1.5x forward P/B. To fully understand why you should be careful with CINF, check out our full research report (it’s free).
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
