Investors’ interest in financially strong mid-cap companies has been growing because these companies reside in the sweet spot between risky small-cap companies and large-cap companies whose growth potential is already factored into their share prices. So, we think it may be wise to invest in mid-cap companies AGCO Corporation (AGCO), Arrow Electronics (NYSE:ARW), Encompass Health (NYSE:EHC), and Tempur Sealy(NYSE:TPX) because they possess solid growth attributes. Let’s take a closer look at these names.Even though investors have been rotating out of expensive growth stocks over the past few months, the performance of mid-cap stocks has been impressive so far this year. This is evident in the iShares Core S&P Mid-Cap ETF’s (IJH) 17.4% returns year-to-date compared to the large-cap focused iShares Core S&P 500 ETF’s (IVV) 12.1% returns.
While small-cap stocks tend to outperform during economic recoveries, they also possess high risk. In contrast, even though large-cap stocks are more stable in terms of returns, their growth potential is already factored into their share prices this year. So, mid-cap stocks reside in the sweet spot in between the two classes of stock. And we think it is wise to invest in shares of mid-cap companies that are well-established in their markets and possess solid growth attributes.
So, for investors looking to bet on mid-cap growth stocks now, we think AGCO Corporation (AGCO), Arrow Electronics, Inc. (ARW), Encompass Health Corporation (EHC), and Tempur Sealy International, Inc. (TPX) could be solid bets.