20 midcap stocks with 2024 upside ranging up to 62%, according to analysts

By Philip van Doorn

Healthcare names dominate the list of Wall Street's favorite medium-size companies

This is the third of a three-part series featuring lists of top stock picks among analysts working for brokerage firms. Part 1 screens large-cap stocks, led by Nvidia Corp. Part 2 screens small-cap stocks.

When investors think about whether to increase their exposure beyond the big companies that grab most of the headlines in the financial media, they are likely to look at small-cap stocks first. After all, the sky's the limit. Meanwhile, midcap companies can get lost in the shuffle.

But it is reasonable to consider medium-size companies that "have proven out their business model but have a lot of room to run," according to Josh West, who manages the highly rated Buffalo Mid Cap Fund BUFMX.

West recently discussed seven midcap tech stocks that he favors.

As discussed in Part 2 of this series, midcaps as a group are trading at relatively low price-to-earnings ratios when compared with the large-cap S&P 500 - screened in Part 1 - and a bit below their historical averages.

   Index                Return since end of 2021  Forward P/E  Current P/E to 5-year average  Current P/E to 10-year average  Current P/E to 15-year average 
   S&P Small Cap 600                         -3%         14.3                            98%                             94%                             98% 
   S&P Mid Cap 400                            1%         14.5                            96%                             94%                             98% 
   S&P 500                                    3%         19.6                           102%                            109%                            121% 
                                                                                                                                             Source: FactSet 

To screen midcaps, we started with the S&P Mid Cap 400 Index MID and cut the list to 369 companies covered by at least five analysts polled by FactSet. Then we reduced the list to 83 companies with buy or equivalent ratings from at least 75% of the analysts.

Among those 83, here are the 20 with the most upside potential over the next year, indicated by consensus price targets:

   Company                                  Ticker   Share buy ratings  Dec. 22 price  Consensus price target  Implied upside potential  Forward P/E 
   Lantheus Holdings Inc.                    LNTH                  91%         $59.59                  $96.64                       62%          9.7 
   R1 RCM Inc.                               RCM                   94%         $10.64                  $17.25                       62%         33.7 
   Jazz Pharmaceuticals PLC                  JAZZ                  78%        $121.25                 $190.38                       57%          6.1 
   MP Materials Corp. Class A                 MP                   92%         $20.09                  $30.00                       49%         34.5 
   Iridium Communications Inc.               IRDM                 100%         $40.66                  $60.50                       49%        135.0 
   Valaris Ltd.                              VAL                  100%         $68.41                 $100.58                       47%         17.0 
   Darling Ingredients Inc.                  DAR                   81%         $49.51                  $71.00                       43%         11.3 
   TKO Group Holdings Inc. Class A           TKO                  100%         $78.84                 $112.00                       42%         25.3 
   Celsius Holdings Inc.                     CELH                  81%         $50.04                  $70.85                       42%         52.9 
   Perrigo Co. PLC                           PRGO                 100%         $31.70                  $44.67                       41%         10.5 
   Teradata Corp.                            TDC                   75%         $44.10                  $62.09                       41%         18.5 
   Frontier Communications Parent Inc.       FYBR                  82%         $24.34                  $34.00                       40%          N/A 
   Civitas Resources Inc.                    CIVI                  91%         $69.69                  $93.91                       35%          4.8 
   HealthEquity Inc.                         HQY                  100%         $65.81                  $88.33                       34%         23.9 
   United Therapeutics Corp.                 UTHR                  80%        $218.93                 $288.73                       32%         10.0 
   Allegro MicroSystems Inc.                 ALGM                  75%         $30.90                  $40.14                       30%         22.9 
   Matador Resources Co.                     MTDR                  88%         $57.61                  $74.60                       29%          6.9 
   Essential Utilities Inc.                  WTRG                 100%         $37.14                  $47.75                       29%         18.7 
   Calix Inc.                                CALX                  88%         $42.76                  $54.75                       28%         26.0 
   Interactive Brokers Group Inc. Class A    IBKR                  80%         $82.11                 $104.44                       27%         13.2 
                                                                                                                                     Source: FactSet 

Click on the tickers for more about each company.

Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.

Don't miss: 13 stocks that are down for 2023 but may bounce back in 2024 or beyond

-Philip van Doorn

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12-26-23 1302ET

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