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.
Luckily for you, our mission at StockStory is to help you make money and avoid losses by sorting the winners from the losers. Keeping that in mind, here is one mid-cap stock with huge upside potential and two best left ignored.
Two Mid-Cap Stocks to Sell:
Encompass Health (EHC)
Market Cap: $12.33 billion
With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE:EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.
Why Is EHC Not Exciting?
- 7.4% annual revenue growth over the last five years was slower than its healthcare peers
- Weak comparable store sales trends over the past two years suggest there may be few opportunities in its core markets to open new facilities
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 3.4 percentage points
Encompass Health’s stock price of $124.63 implies a valuation ratio of 17.6x forward P/E. Read our free research report to see why you should think twice about including EHC in your portfolio.
Viasat (VSAT)
Market Cap: $11.29 billion
Operating a fleet of 23 satellites that orbit the Earth and beam connectivity from space, Viasat (NASDAQ:VSAT) provides satellite-based communications networks and services for airlines, maritime vessels, governments, businesses, and residential customers worldwide.
Why Are We Out on VSAT?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Earnings per share fell by 8.4% annually over the last five years while its revenue grew, partly because it diluted shareholders
- Negative free cash flow raises questions about the return timeline for its investments
At $82.50 per share, Viasat trades at 10.4x forward EV-to-EBITDA. To fully understand why you should be careful with VSAT, check out our full research report (it’s free).
One Mid-Cap Stock to Watch:
Texas Roadhouse (TXRH)
Market Cap: $13.68 billion
With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ:TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.
Why Does TXRH Stand Out?
- Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
- Same-store sales growth averaged 6.1% over the past two years, showing it’s bringing new and repeat diners into its restaurants
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Texas Roadhouse is trading at $207.50 per share, or 28.9x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.