Mid-cap stocks can offer balanced diversification in the portfolio, create long-term gains, and capital appreciation, making them ideal as long-term investments.
Therefore, investors could consider investing in quality mid-cap stocks Pilgrim’s Pride Corporation (PPC), Ipsen S.A. (IPSEY), and Isuzu Motors Limited (ISUZY) for gains.
Despite headwinds like elevated debt burdens, higher interest rates and various geopolitical uncertainties, the global economy is growing at a decent pace, supported by an easing inflation, more accommodative financial conditions and rise in global trade. In the July’s update, S&P Global Market Intelligence analysts’ forecast maintained global real GDP growth at 2.7% in 2024.
According to a world bank report, the global economy is expected to grow by 2.6% in 2024 and is anticipated to grow to a 2.7% in 2025-26. Also, developing economies are grow to grow 4% on average during 2024-25.
Amid this, mid-cap stocks prospects appear promising. With durable earnings growth and near-record valuation, they present great potential for entry in the segment. Various stocks in the category focus on profitability and, growing competitive advantage and potential of becoming large-cap stocks over the time.
Further, mid-cap stocks offer capital appreciation, effective portfolio diversification, and great long term gains, making them suitable investment choices.
Considering the economy’s outlook, it could be wise to invest in robust mid-cap stocks such as PPC, IPSEY, and ISUZY having big cap potential.
Pilgrim’s Pride Corporation (PPC)
PPC produces, processes, markets, and distributes fresh, frozen, and value-added chicken and pork products to retailers, distributors, and foodservice operators. The company offers fresh products, like refrigerated whole or cut-up chicken, selected chicken parts, primary pork cuts, added value pork, and pork ribs. It has a $10.45 billion market capitalization.
In terms of forward non-GAAP P/E, PPC is trading at 10.77 x, 36.9% lower than the industry average of 17.07x. Likewise, the stock’s forward Price/Sales multiple of 0.58 is 54.5% lower than the industry average of 1.28. Also, its forward EV/EBITDA of 6.97x is 34.2% lower than the industry average of 10.60x.
For the second quarter that ended June 30, 2024, PPC’s net sales increased 5.8% year-over-year to $4.56 billion. The company’s operating income rose 339.5% from the year-ago value to $440.79 million. Adjusted net income attributable to Pilgrim’s of $397.96 million and $1.67 per common share, indicate growths of 278.1% and 279.5% from the prior year’s quarter, respectively.
Also, the company’s adjusted EBITDA increased 163.7% from the year-ago quarter to $655.94 million. Its cash and cash equivalents stood at $1.32 billion as of June 30, 2024, compared to $697.75 million as of December 31, 2023.
Analysts expect PPC’s revenue for the third quarter (ending September 2024) to increase 3.6% year-over-year to $4.52 billion and its EPS for the ongoing quarter is expected to grow 126.3% year-over-year to $1.31. Furthermore, the company has topped the consensus EPS estimates in each of the trailing four quarters.
Shares of PPC have gained 62.3% over the past six months and 75.4% over the past year to close the last trading session at $44.05.
PPC’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
PPC has an A grade for Growth and Stability. It also has a B grade for Sentiment and Quality. The stock has topped among the 76 stocks in the B-rated Food Makers industry.
To check other POWR Ratings of PPC for Value and Momentum, click here.
Ipsen S.A. (IPSEY)
Headquartered in Boulogne-Billancourt, France, IPSEY operates as a biopharmaceutical company globally. It provides drugs in the oncology, neuroscience, and rare diseases areas. The company provides Somatuline, Dysport, Decapeptyl, Cabometyx, Onivyde, and Tazverik. It also offers NutropinAq for growth failure in children. IPSEY is valued at $9.25 billion by market cap.
On July 26, IPSEY received CHMP positive opinions for Iqirvo® (elafibranor) recommended for treating primary biliary cholangitis and Kayfanda® (odevixibat) recommended for cholestatic pruritus in patients with Alagille syndrome, two rare cholestatic liver diseases.
The CHMP positive opinions received for two potential new medicines in rare cholestatic liver diseases, on the same day marked a rare achievement for IPSEY. It demonstrates the company’s commitment to address the unmet medical needs in such diseases.
On July 25, IPSEY and Day One Biopharmaceuticals (DAWN) entered into a new global partnership outside the U.S. through an exclusive licensing agreement to commercialize tovorafenib for pediatric low grade glioma (pLGG), the most common childhood brain tumor.
During the first half that ended June 30, 2024, IPSEY’s total sales increased 8% year-over-year to €1.66 billion ($1.81 billion). Its core operating income grew 2.8% from the year-ago value to €538 million ($588.10 million). The company’s consolidated net profit came in at €232.30 million ($253.93 million) or €2.78 per share, up 19.1% and 18.4% year-over-year, respectively.
In addition, the company’s free cash flow rose 5.9% from the year-ago value to €393.50 million ($430.14 million).
As per the full-year 2024 guidance, IPSEY expects total-sales growth of more than 7%, at constant currency, updated from the prior guidance of 6.0%.
Analysts expect IPSEY’s revenue for the fiscal year (ending December 2024) to grow 12.3% year-over-year to $3.79 billion. Over the past six months, the stock has plunged 4.1% to close the last trading session at $28.08.
IPSEY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
IPSEY has an A grade for Value and Stability and a B grade for Quality. It is ranked #15 among 152 stocks within the Medical - Pharmaceuticals industry.
To see the other ratings of IPSEY for Growth, Sentiment, and Momentum, click here.
Isuzu Motors Limited (ISUZY)
Based in Yokohama-shi, Japan, ISUZY manufactures and sells commercial vehicles, light commercial vehicles, and diesel engines and components globally. Its products comprise of heavy and medium-duty trucks and buses, and light-duty trucks, passenger pickup vehicles, pickup trucks, and SUVs, and marine and industrial engines.
On July 31, ISUZY initiated the global launch of connected services for BEV trucks – beginning with light-duty BEV trucks for North America in the present year and will gradually expand the services to other markets around the world in conjunction with the introduction of BEV trucks.
On July 29, ISUZY started production of new heavy-duty S&E Series for international markets at the Thai production base of UD Trucks Corporation, an Isuzu Group company. It will be introduced mainly to markets across ASEAN (Association of Southeast Asian Nations), the Middle East, and Latin America.
Isuzu and UD Trucks are continuously expanding their product collaboration since last year and will continue to accelerate synergies.
For the first quarter that ended June 30, 2024, ISUZY reported net sales of ¥747.95 billion ($5.16 billion). Its operating income grew 12.1% from the year-ago value to ¥76.91 billion ($530.28 million). Net income attributable to owners of parent came in at ¥46.91 billion ($323.44 million) and ¥62.66 per share, up 3.3% and 7.8% from the prior year’s quarter, respectively.
Analysts expect ISUZY’s revenue for the second quarter (ending September 2026) to grow marginally year-over-year to $5.70 billion. For the fiscal year 2024, the company’s revenue is expected to grow 173.7% year-over-year to $23.05 billion. Moreover, the company surpassed the consensus revenue estimates in three of the four trailing quarters.
Over the past year, the stock has surged 2% to close the last trading session at $13.05.
ISUZY’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
ISUZY has an A grade for Value and a B for Stability and Quality. It is ranked #9 among the 52 stocks within the Auto & Vehicle Manufacturers industry.
To see the other ratings of ISUZY for Growth, Momentum, and Sentiment, click here.
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43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
PPC shares were trading at $44.76 per share on Thursday afternoon, up $0.71 (+1.61%). Year-to-date, PPC has gained 61.82%, versus a 12.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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