- Large-company stocks are relatively stable but move too slowly for many investors.
- Small-company stocks’ value can rise quickly but could be seen as a gamble at a time in which investors aren’t exactly excited by the notion of taking on added risk.
“There are a lot of interesting companies in that area and there’s certainly a place for mid-caps in anyone’s portfolio.”
Stocks at these midsized companies aren’t called the“sweet spot”without reason. Indeed, the class of stocks that not too many years ago were classless — lumped in with large-cap stocks — has outperformed their larger and smaller peers.
BetterInvesting uses annual revenue to determine a company’s category.
- For instance, midsized companies have annual revenues between $500 million and $5 billion.
- Small companies have revenue below $500 million and
- large-company revenue weighs in at more than $5 billion.
Screening for Mid-Size Companies
1. Past performances
- trailing-12-month revenues of between $500 million and $5 billion;
- five-year sales and earnings growth of at least 12 percent.
- forecasted five-year annual earnings and sales growth of 12 percent; and
- a projected annual total return for the next three to five years of at least 12 percent.
Also, look for Financial Strength and Earnings Predictability.
As with any stock screen,this is just a starting point for research; no investment recommendations are intended.
Also, make sure any company of interest looks suitable on a Stock Selection Guide using your own judgments.