Given the complexities of the post-pandemic economy, investors may be served well seeking out the balanced profiles of the best mid-cap stocks to buy this month. In other circumstances, going through the middle of the road might be considered bland or playing it too safe. However, in the context of the equities sector, middle-capitalization companies offer a compelling mix between stable business models and robust growth potential.
Indeed, the rising interest rate environment poses significant challenges for investments geared exclusively to high growth. With rising rates comes increased borrowing costs, which then disincentivize entrepreneurs from taking the big risks necessary to enjoy groundbreaking success. In contrast, the best mid-cap stocks are tied to viable businesses but still have room left for more upside.
On the other end of the spectrum, should a global recession materialize, it could really put a hurting on the blue-chip sector. With so much institutional money tied into the biggest names in business, the resulting panic could be catastrophic. While the best mid-cap stocks won’t be completely immune, some of them may be able to fly under the radar.
|PNW||Pinnacle West Capital||$69.95|
Best Mid-Cap Stocks: Enviva (EVA)
For those investors that have a long-term view of their choice holdings, Enviva (NYSE:EVA) offers a very compelling narrative. Billed as the world’s largest producer of industrial wood pellets, Enviva provides a low-carbon alternative to coal. Per its website, “Wood-based bioenergy is part of an all-in renewables strategy to reduce carbon emissions and limit dependence on fossil fuels.”
The latter point is particularly significant due to the backdrop of the eastern European conflict. With Russia’s dangerous invasion of Ukraine, the subsequent U.S.-backed sanctions against the aggressor effectively shelved a significant portion of hydrocarbon energy supplies. Naturally, western powers scrambled for alternatives but unfortunately, such measures will take time to develop and implement.
That goes for Enviva as well. However, if there is a silver lining to this horrible and senseless geopolitical nightmare, it’s that government bodies are now much more willing to lay down serious investments into alternative energy sources. Yes, EVA is considered overvalued at the moment. However, in the long run, geopolitical necessities may make it one of the best mid-cap stocks to buy.
Pinnacle West Capital (PNW)
During times of trouble, a relatively easy idea to put your money to work is the utilities sector. As society becomes increasingly integrated with digital networks, there’s never been a more important time to have access to power. However, investors may also want to show some love to the lesser-appreciated names like Pinnacle West Capital (NYSE:PNW).
Unlike some of the major utility companies, Pinnacle West Capital is primarily focused on its home state of Arizona. Essentially, PNW features two clear advantages. First, it’s one of the mid-cap stocks to buy that for all intents and purposes is permanently relevant. As I’ve stated many times before, bad things happen when people flip the switch and no light appears.
Second, Pinnacle is fortuitously positioned as a beneficiary of migration patterns. In 2019, the effects of migration meant that millennials represented 23% of Phoenix, Arizona’s population. With living costs soaring in coastal metropolitan areas, Phoenix and other cities in the Grand Canyon State could enjoy more influxes, thus making PNW one of the best mid-cap stocks to buy.
Best Mid-Cap Stocks: Hess Midstream (HESM)
Not to pull a complete 180 within a few paragraphs, Hess Midstream (NYSE:HESM) deserves consideration as a candidate for the best mid-cap stocks to buy this month. As a midstream player in the hydrocarbon industry, Hess primarily specializes in the storage, processing and exporting of crude oil and natural gas. It also provides water services, affording it a diverse business profile.
Fundamentally, while renewable energy infrastructures may be the future, Hess Midstream is relevant right now. Beyond that, building out next-generation systems and networks may take many, many years. In the meantime, residences and commercial properties have to get their energy somehow. Therefore, Hess is one of the work horses of the U.S. economy.
To be clear, Hess Midstream is a master limited partnership so anyone picking up shares must be prepared to deal with the complex tax implications. However, the main advantage of HESM is its dividend yield, which is currently at 7.75%.
H&R Block (HRB)
Although H&R Block (NYSE:HRB) is considered overvalued based on traditional financial metrics, investors will want to keep close tabs on the tax-preparation firm. For a large portion of working America, taxes are generally straightforward. If you’re an employee of a company, your employer does much of the administrative heavy lifting.
However, according to a CNBC report in March of this year, half of surveyed companies want their workers back in the office five days a week. After getting a taste of true work-life balance, there are inarguably plenty of people who will object. And some of those may make the jump and branch out on their own, a trajectory that will expand the gig economy.
Still, everything has its set of pros and cons. One of the not-so-great aspects of the gig life is the taxes. They’re just much more complicated than your typical W2 forms that employees receive. To help navigate the tax minefield, H&R Block is ready to fill the gap, making it one of the best mid-cap stocks to buy on any significant discount.
Best Mid-Cap Stocks: Sturm Ruger (RGR)
This may seem like an interesting pick, but there are reasons why firearms manufacturer Sturm Ruger (NYSE:RGR) is a top mid-cap stock to buy.
According to a Wall Street Journal report early this year, many law enforcement departments are short staffed amid an environment of rising crime rates and growing public scrutiny against police officers.
Understandably, fewer workers want to take on an increasingly dangerous and thankless job. Unfortunately, at scale, this trend means that individual households must be responsible for their protection. That’s why Ruger and its ilk may be providing a public service — although I recognize that not everyone will see it that way.
When Tesla (NASDAQ:TSLA) head executive Elon Musk demanded that his employees return back to the office — implying consequences for those that refuse — his commentary caused quite a stir on social media and public forums. Understandably, with so many people enjoying their work while not having to deal with rush-hour traffic — and other unspoken unpleasantries in the office — people were upset with Musk’s dinosaur-era attitude.
Nevertheless, the bigger problem that few people apparently realize is if work from home becomes permanent via a global recession. That’s why I think ManpowerGroup (NYSE:MAN) might be one of the underappreciated gems among the best mid-cap stocks to buy. Sure, it’s down 19% on a year-to-date basis. However, growing desperation in the labor force can turn this narrative around.
While we’re not at the point where unemployment is at 20% or something ridiculous, a great many technology firms have already distributed pink slips. As well, the mortgage industry is laying off their previously high-flying workers, cynically suggesting that Manpower can get exactly what its brand states.
Best Mid-Cap Stocks: Shutterstock (SSTK)
Admittedly one of the high-risk, high-reward ideas among the best mid-cap stocks to buy, Shutterstock (NYSE:SSTK) is ideal for those who are considering swinging for the fences with investment funds they can afford to lose should the thesis go awry. And what is that thesis? Namely, the provider of stock photography, video footage and music appeals to the incoming entrants of the gig economy.
According to Statista.com, the projected gross volume of the gig economy is forecasted to reach slightly over $455 billion. Further, disillusioned cubicle warriors could decide enough is enough, thereby expanding this sector beyond previous projections.
Further, Shutterstock could be surprisingly relevant for gig workers. Apparently, about one in three Americans have a side hustle, which invariably will involve creative types of work, such as video editing and content creation. As the more serious individuals develop their side hustles into a permanent occupation, demand for services like Shutterstock could rise.
Granted, it’s a risky idea as I mentioned earlier. However, it also enticingly plays into modern trends in the workforce.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.