3 Mid-Cap Stocks We Think Twice About

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Many investors pay attention to mid-cap stocks because they have established business models and expansive market opportunities. However, their paths to becoming $100 billion corporations are ripe with competition, ranging from giants with vast resources to agile upstarts eager to disrupt the status quo.

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 pass on and some alternatives you should look into instead.

Ralph Lauren (RL)

Market Cap: $21.65 billion

Originally founded as a necktie company, Ralph Lauren (NYSE: RL) is an iconic American fashion brand known for its classic and sophisticated style.

Why Should You Sell RL?

  1. Weak constant currency growth over the past two years indicates challenges in maintaining its market share
  2. Poor expense management has led to an operating margin of 15% that is below the industry average
  3. Poor free cash flow margin of 11.6% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Ralph Lauren is trading at $362.34 per share, or 18.5x forward P/E. Read our free research report to see why you should think twice about including RL in your portfolio.

Tapestry (TPR)

Market Cap: $23.44 billion

Originally founded as Coach, Tapestry (NYSE: TPR) is an American fashion conglomerate with a portfolio of luxury brands offering high-quality accessories and fashion products.

Why Do We Steer Clear of TPR?

  1. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
  2. Projected 3.2 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
  3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Tapestry’s stock price of $117.65 implies a valuation ratio of 15x forward P/E. Check out our free in-depth research report to learn more about why TPR doesn’t pass our bar.

Flutter Entertainment (FLUT)

Market Cap: $12.98 billion

With its digital fingerprints on nearly every aspect of global gambling, from the Super Bowl bettor to the online poker aficionado, Flutter Entertainment (NASDAQ: FLUT) operates a portfolio of leading online sports betting and gaming brands including FanDuel, PokerStars, Paddy Power, and Sky Betting & Gaming.

Why Are We Out on FLUT?

  1. The company has faced growth challenges as its 19.3% annual revenue increases over the last five years fell short of other consumer discretionary companies
  2. Free cash flow margin is projected to show no improvement next year
  3. Returns on capital are growing as management invests in more worthwhile ventures

At $74.82 per share, Flutter Entertainment trades at 12.7x forward P/E. Dive into our free research report to see why there are better opportunities than FLUT.

Stocks We Like More

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

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