Best Mid-Caps Stocks || Trading Fuel Research Lab
What are Mid-Caps Stocks?
Maybe this is what you are thinking.
Some say Mid-Caps are risky stocks to invest in and many more.
But don’t worry from today’s article on “Best Mid-Caps Stocks” will solve all your problems and doubts about this.
What actually are Mid-caps?
Let’s start with this.
What are Mid-Caps Stocks?
Mid-cap defines companies and stocks which fall in between large-cap and small-cap categories.
The range of Mid-caps falls in between Rs 5,000-20,000 crore.
This classification is variable and can be changed with the change in a company’s market valuation.
The term market capitalization is calculated with the help of a company’s outstanding number of shares and the value of each share.
However, the classification is also subject to the understanding that the company’s rank in the benchmark indices will be such as Sensex and Nifty.
For example, according to the listing, the companies that are listed from 101st – 250th in the Nifty Index are generally considered as mid-cap companies.
Nifty has a benchmark in the mid-cap index in India that is also known as Nifty Midcap 50.
Nifty Mid-cap 50 hosts and combines the top 50 most traded mid-cap securities in the market.
Given their advantageous position in the stock market, where they can exploit the best of both ends, i.e. risk moderation and substantial returns, they had catches the eye of seasoned investors.
They also provide diversification benefit to an investor’s portfolio.
A company’s gets an upgrade from small-cap, in the major cases, attests to its growing profitability and productivity until it reaches the large-cap tier.
In the process, there is an increment in both components of returns – dividends and value appreciation.
What are the factors that need to be considered by Investors before investing in Mid-Caps?
1. Financial Health:
The very first thing that matters is do not consider the stock sixe initially rather than look into the various companies strong balance sheet.
No doubt, but only a strong balance sheet will help the companies to enjoy the perks for a longer time period.
In the end, only the stronger balance sheet will enable the mid-cap companies to provide less risk
The Revenue and earnings growth are only the two most important factors in long-term returns.
The Mid-cap stocks have outperformed both large-cap and small-cap stocks because of their superior growth on both the top and bottom line.
The Industry experts suggest mid-caps when they are able to produce better returns because they are quicker to act than large caps and more financially stable than small caps, due to there is a room for growth.
3. Management Quality:
The most important factor one should be careful of while investing in mid-cap companies is about their management quality.
Since the large-cap companies have a long history to be know, that in-depth it covers by the research and brokerage houses, so that the investors will be more confident about the quality of their management.
But in the mid-cap stocks, we have to ensure that the company’s management has the capability and bandwidth to take the company to the next level. However, as the mid-cap companies are generally under-researched, there is a need for stricter due diligence.
4. Competitive Advantage:
This is one of the best ways to identify a good midcap stock.
A company can stay in the competition by offering better services and products when it is growing.
To spot whether a company possesses a competitive advantage, we need to see how innovative they have been. You can do so by taking a look at the patents they have, how active their R&D wing is, and how frequently they launch their innovative products and services.
5. High Margin Businesses:
Another important criterion for a good midcap stock is to look into the businesses that have high margins.
Generally, the companies command high margins either due to a lack of competition or some moat, some operational efficiency or because they command a leading position in the industry.
Moreover, these stocks should have sustained the margin over a time that doesn’t fluctuate every quarter or year.
Now, let’s check out the Best Mid-Caps Stocks.
Best Mid-Caps Stocks
|1||Crompton Greaves Consumer Electricals||Household Industry|
|4||Polycab India||Other Elect.Equipments|
|5||Deepak Nitrite||Commodity Chemicals|
|6||Narayana Hrundayalaya Limited||Healthcare Facilities|
|7||Gujarat Gas||Integrated Oil & Gas|
|9||Aarti Industries||Speciality Chemicals|
|10||Sundaram Fasteners||Auto Parts & Equipment|
From this article on, “Best Mid-caps Stocks” will eventually explain the definition and current best mid-cap companies that are doing well are listed here. I hope that you would be understood the purpose of sharing this article is because of the investor’s struggles to understand the concept as there are vast things to be noted.
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