Mid-cap stocks with ‘significant scope’ to upside – WF

Mid-cap growth stocks (NYSEARCA:MDYG) are technically oversold and have significant scope to outperform even when the group is up double digits (16.8%) year-to-date, according to Wells Fargo.

In addition, their earnings stability, risk, liquidity, and balance sheet look more attractive than small caps, Christopher P. Harvey, head of Equity Strategy, Global Research, Economics and Strategy at Wells Fargo, said in a note.

Its relative price-to-earnings valuation is about 90% of the S&P 500 (SP500).

The total returns since June for mid-cap growth stocks (MDYG) is 12.7%, compared to 9.2% for the Russell 200 (IWM), 6.9% for the S&P 400 (SP400), and 8.8% for the S&P 500 (SP500).

The following are Wells Fargo’s mid-cap growth portfolio:

Communication services

• Omnicom Group (OMC)
• Spotify (SPOT)

Consumer discretionary

• Murphy USA (MUSA)
• Ross Stores (ROST)
• Burlington Stores (BURL)
• Royal Caribbean (RCL)
• Carnival Corp. (CCL)
• The GAP Inc. (GAP)
• Lennar Corp. (LEN)
• PulteGroup (PHM)

Consumer staples

• Church & Dwight (CHD)
• Performance Food Group (PFGC)

Energy

• Coterra Energy (CTRA)
• Devon Energy (DVN)
• Targa Resources (TRGP)

Financials

• Block Inc. (QS)
• Willis Towers Watson (WTW)
• KeyCorp (KEY)
• Synovus Financial (SNV)

Health care

• The Cooper Companies (COO)
• Neurocrine Biosciences (NBIX)
• United Therapeutics (UTHR)
• Universal Health Services (UHS)

Industrials

• Acuity Brands (AYI)
• Ingersoll Rand (IR)
• Lennox International (LII)
• Parker-Hannifin (PH)
• CACI International (CACI)
• Howmet Aerospace (HWM)
• Hexcel Corp. (HXL)
• Ferguson Enterprises (FERG)

Information technology

• Guidewire Software (GWRE)
• HubSpot (HUBS)
• Monolithic Power Systems (MPWR)
• Pure Storage (PSTG)
• CrowdStrike (CRWD)

Materials

• PPG Industries (PPG)
• AptarGroup (ATR)
• LyondellBasell Industries (LYB)

Real estate

• Host Hotels & Resorts (HST)
• Digital Realty (DLR)
• AvalonBay Communities (AVB)

Utilities

• PPL Corp. (PPL)