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(Story updated to add that Barclays Capital initiated coverage of Weight Watchers International with an "overweight" rating.)
TheStreet) -- Mid-cap stocks, companies with market values between $1 billion and $10 billion, tend to get overlooked by investors, who gravitate to the high-profile stability of
S&P 500 large-cap stocks or chase the returns on fast-moving small-caps.
But they're missing out on what is a hot spot this year. The
S&P Mid-Cap 400 Index has returned 10%, better than the S&P 500's 8% rise and the small-cap
Russell 2000 Index's 7.6 % gain.
What's more, Fidelity Investments said this week that "on a risk-adjusted basis, (mid-caps) have outperformed their small- and large-cap cousins over the past 20 years" and "there are compelling reasons to believe that outperformance could continue."
Mid-cap stocks have greater growth potential than large-caps, carry less risk than small-caps and, given the huge cash holdings of many of S&P 500 member companies, they could be takeover targets, which would result in a healthy premium for existing shareholders, Fidelity said.
John Roth, manager of the
Fidelity Mid-Cap Stock Fund(FMCSX), said earnings growth is what principally drives share-price appreciation in the mid-cap category, rather than the many variables, financial and otherwise, that can influence other capitalization sectors. "That gives me some comfort that this is a trend that could be here to stay," Roth said.
S&P Capital IQ also sang the praises of mid-cap stocks recently, saying that "compared to small-caps, mid-caps are typically better-established companies with more seasoned management teams, relatively developed distribution and a solid presence in the markets in which they compete. On the other side, mid-caps can grow faster and are generally less bureaucratic than larger companies."
10 mid-cap stocks with good earnings trends, solid financial fundamentals and total returns of 35% to 89% this year, presented in inverse order of return: