Mid-cap stocks have the best odds of scaling into $100 billion corporations thanks to their tested business models and large addressable markets. But the many opportunities in front of them attract significant competition, spanning from industry behemoths with seemingly infinite resources to small, nimble players with chips on their shoulders.

This is precisely where StockStory comes in - we do the heavy lifting to identify companies with solid fundamentals so you can invest with confidence. That said, here are three mid-cap stocks to avoid and some other investments you should consider instead.

Textron (TXT)

Market Cap: $13.86 billion

Listed on the NYSE in 1947, Textron (NYSE: TXT) provides products and services in the aerospace, defense, industrial, and finance sectors.

Why Are We Wary of TXT?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.3% over the last five years was below our standards for the industrials sector
2. Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
3. Free cash flow margin dropped by 6.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Textron’s stock price of $78.16 implies a valuation ratio of 12x forward P/E. If you’re considering TXT for your portfolio, see our FREE research report to learn more.

Revvity (RVTY)

Market Cap: $10.36 billion

Formerly known as PerkinElmer until its rebranding in 2023, Revvity (NYSE: RVTY) provides health science technologies and services that support the complete workflow from discovery to development and diagnosis to cure.

Why Should You Sell RVTY?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Inability to adjust its cost structure while its revenue declined over the last five years led to a 9.9 percentage point drop in the company’s adjusted operating margin
3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

At $89.75 per share, Revvity trades at 16.6x forward P/E. Check out our free in-depth research report to learn more about why RVTY doesn’t pass our bar.

CDW (CDW)

Market Cap: $22.96 billion

Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ: CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.

Why Should You Dump CDW?

1. Annual sales declines of 3.5% for the past two years show its products and services struggled to connect with the market during this cycle
2. Estimated sales growth of 2.1% for the next 12 months is soft and implies weaker demand
3. Flat earnings per share over the last two years lagged its peers

CDW is trading at $176.40 per share, or 17.8x forward P/E. Read our free research report to see why you should think twice about including CDW in your portfolio.

Stocks We Like More

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