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.
Restaurant Brands (QSR)
Market Cap: $20.49 billion
Formed through a strategic merger, Restaurant Brands International (NYSE: QSR) is a multinational corporation that owns three iconic fast-food chains: Burger King, Tim Hortons, and Popeyes.
Why Does QSR Fall Short?
- Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its six-year trend
- Efficiency has decreased over the last year as its operating margin fell by 6.8 percentage points
- High net-debt-to-EBITDA ratio of 5× could force the company to raise capital at unfavorable terms if market conditions deteriorate
Restaurant Brands’s stock price of $62.43 implies a valuation ratio of 16x forward P/E. If you’re considering QSR for your portfolio, see our FREE research report to learn more.
Veralto (VLTO)
Market Cap: $26.13 billion
Spun off from Danaher in 2023, Veralto (NYSE: VLTO) provides water analytics and treatment solutions.
Why Is VLTO Risky?
- 4% annual revenue growth over the last four years was slower than its industrials peers
- Anticipated sales growth of 5.6% for the next year implies demand will be shaky
- Earnings per share were flat over the last four years while its revenue grew, showing its incremental sales were less profitable
Veralto is trading at $104 per share, or 27.3x forward P/E. Dive into our free research report to see why there are better opportunities than VLTO.
U-Haul (UHAL)
Market Cap: $10.26 billion
Founded by a husband and wife duo, U-Haul (NYSE: UHAL) is a provider of rental trucks and storage facilities.
Why Do We Steer Clear of UHAL?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $57.09 per share, U-Haul trades at 1.9x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including UHAL in your portfolio.
Stocks We Like More
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Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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