In the current investment landscape, SMID-cap stocks present a compelling opportunity for investors looking to capitalize on undervalued assets. These stocks, representing small to mid-sized companies, often offer significant growth potential compared to their larger counterparts. This article discusses key investment opportunities within the SMID-cap sector, highlighting the importance of economic moats for sustainable returns.
Among the noteworthy recommendations is Ionis Pharmaceuticals (IONS), which has been identified by Morningstar as a stock with a narrow economic moat. Despite challenges, Ionis’s innovative RNA-targeted therapies position it for long-term success. Morningstar recently raised its fair value estimate to $69, indicating the stock’s potential for appreciation.
CarMax (KMX) also stands out in this segment. The company, known for its used car retailing, boasts a narrow economic moat and is currently trading below its fair value estimate of $135. With recent sales performance exceeding estimates, CarMax presents a solid investment opportunity.
Another notable mention is Norwegian Cruise Line (NCLH), which is trading approximately 70% below its pre-pandemic highs. Morningstar suggests that this undervaluation, combined with recovery potential in the travel industry, makes it an attractive buy.
Zoom Video Communications (ZM) maintains a strong position in the market with a narrow moat and a fair value estimate of $89. As remote work continues to influence business operations, Zoom’s growth trajectory remains promising.
Wynn Resorts (WYNN) is another stock to consider. With a recent fair value assessment indicating it is within a fairly valued range, Wynn’s strong brand and market presence in the gaming industry underscore its potential for investors.
Baxter International (BAX) has been noted for its improving intermediate-term outlook, despite being heavily discounted below its fair value estimate of $67. This presents an opportunity for investors looking for value in healthcare stocks.
Scotts Miracle-Gro (SMG) is on a turnaround path, with management guidance indicating growth in sales and operating margins. This makes it a compelling option for investors interested in the gardening and outdoor sectors.
Lastly, Global Payments (GPN) continues to maintain a solid competitive position within the payment processing industry. Morningstar’s evaluations highlight its strong fundamentals, making it a prudent investment choice.
Investors are encouraged to conduct thorough research and consider these recommendations as part of a balanced investment strategy focused on the promising SMID-cap sector.
For personalized investment strategies and insights, consider reaching out to a financial advisor.