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5 Top-Ranked Mid-Cap Tech Stocks to Buy for Healthy Returns
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Wall Street ended 2023 on a terrific note, with the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallying 14%, 24% and 43%, respectively. The Dow had a superb December, reaching multiple highs, while the S&P 500 entered 2024 very close to its all-time high and Nasdaq registered its best performance since 2023.
Nasdaq’s outperformance can be attributed to robust performances from the “Magnificent Seven” — a term coined by Bank of America analyst Michael Hartnett — comprising Apple, Alphabet, Amazon, Meta Platforms, Microsoft, NVIDIA and Tesla.
Prospects for 2024 are bright, given resilient economic growth, cooling inflation, growing expectations of rapid rate cuts by the U.S. Federal Reserve, the upswing in consumer confidence and increasing chances of a soft landing. The forthcoming Presidential election is also a potential tailwind for the U.S. equities.
Why Mid-Cap Techs Are Better
Mid-cap stocks (market capital >$5 billion <$10 billion) offer better growth prospects as they combine the attractive attributes of both small and large-cap stocks. They have significant room to grow at an acceptable level of risk. These stocks are more agile in terms of adapting to macroeconomic scenarios and tend to outperform large caps during bull markets.
Top-ranked, mid-cap stocks have a high potential to enhance their profitability, productivity and market share. Meanwhile, tech stocks are expected to perform well this year thanks to the growing proliferation of AI and machine learning. Spending on AI systems is expected to accelerate in 2024 as organizations continue to leverage AI as part of their digital transformation efforts.
The advent of generative AI has further attracted investments. The technology has already proven beneficial across a variety of industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy and utilities, and video game development.
Semiconductor sales are expected to grow this year thanks to strong demand for chips that power AI and generative AI processes. The World Semiconductor Trade Statistics organization expects semiconductor sales to grow 13.1%, following an estimated 9.4% decline in 2023.
Our Picks
Here, we have picked five mid-cap tech stocks that are well-poised to outperform this year. These stocks have a favorable combination of a Growth Score of A and a Zacks Rank of #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Per the Zacks proprietary methodology, stocks with this favorable combination offer good investment opportunities.
Image Source: Zacks Investment Research
monday.com (MNDY - Free Report) is benefiting from an expanding clientele driven by growing cross-selling opportunities.
monday.com currently flaunts a Zacks Rank #1 and has a market cap of $8.29 billion. The Zacks Consensus Estimate for 2024 earnings has surged 61.7% over the past 60 days to $1.73 per share. MNDY shares have returned 57.3% in the past year.
Qualys (QLYS - Free Report) is riding on strong demand for its VMDR solution. This Zacks Rank #1 company is benefiting from an expanding clientele thanks to the strong adoption of cybersecurity asset management with external attack surface management and patch management solutions.
The consensus mark for Qualys’ 2024 earnings has increased 6.7% to $5.29 per share over the past 60 days. QLYS has a market cap of $7.22 billion and its shares have surged 76% in the past year.
Gitlab (GTLB - Free Report) is benefiting from a robust product portfolio that integrates AI-powered DevSecOps features into a single application to boost productivity. It enables businesses to create more reliable and functionality-packed mission-critical software.
This Zacks Rank #2 company’s platform improves engineering productivity and reduces software spend. Gitlab has a market cap of $9.8 billion.
GTLB shares have gained 43.3% in the past year. The consensus mark for fiscal 2025 earnings has jumped 126.7% over the past 60 days to 34 cents per share.
Fabrinet (FN - Free Report) is benefiting from strong demand for its next-generation optical interconnect for AI applications. This is expected to drive this Zacks Rank #2 company’s top-line growth this year.
Fabrinet currently has a market cap of $6.91 billion and its shares have returned 45.5% in the past year. The Zacks Consensus Estimate for its fiscal 2024 earnings has improved 2% over the past 60 days to $8.25 per share.
Smartsheet (SMAR - Free Report) is benefiting from an expanding customer base. This Zacks Rank #2 company ended third-quarter fiscal 2024 with an annual recurring revenue (ARR) of $981 million and more than 13.9 million Smartsheet users. SMAR had 59 customers with ARR above $1 million.
Smartsheet has a market cap of $6.52 billion and its shares have returned 23% in the trailing 12-month period. The consensus mark for fiscal 2025 earnings has jumped 20.3% over the past 60 days to 89 cents per share.
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5 Top-Ranked Mid-Cap Tech Stocks to Buy for Healthy Returns
Wall Street ended 2023 on a terrific note, with the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallying 14%, 24% and 43%, respectively. The Dow had a superb December, reaching multiple highs, while the S&P 500 entered 2024 very close to its all-time high and Nasdaq registered its best performance since 2023.
Nasdaq’s outperformance can be attributed to robust performances from the “Magnificent Seven” — a term coined by Bank of America analyst Michael Hartnett — comprising Apple, Alphabet, Amazon, Meta Platforms, Microsoft, NVIDIA and Tesla.
Prospects for 2024 are bright, given resilient economic growth, cooling inflation, growing expectations of rapid rate cuts by the U.S. Federal Reserve, the upswing in consumer confidence and increasing chances of a soft landing. The forthcoming Presidential election is also a potential tailwind for the U.S. equities.
Why Mid-Cap Techs Are Better
Mid-cap stocks (market capital >$5 billion <$10 billion) offer better growth prospects as they combine the attractive attributes of both small and large-cap stocks. They have significant room to grow at an acceptable level of risk. These stocks are more agile in terms of adapting to macroeconomic scenarios and tend to outperform large caps during bull markets.
Top-ranked, mid-cap stocks have a high potential to enhance their profitability, productivity and market share. Meanwhile, tech stocks are expected to perform well this year thanks to the growing proliferation of AI and machine learning. Spending on AI systems is expected to accelerate in 2024 as organizations continue to leverage AI as part of their digital transformation efforts.
The advent of generative AI has further attracted investments. The technology has already proven beneficial across a variety of industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy and utilities, and video game development.
Semiconductor sales are expected to grow this year thanks to strong demand for chips that power AI and generative AI processes. The World Semiconductor Trade Statistics organization expects semiconductor sales to grow 13.1%, following an estimated 9.4% decline in 2023.
Our Picks
Here, we have picked five mid-cap tech stocks that are well-poised to outperform this year. These stocks have a favorable combination of a Growth Score of A and a Zacks Rank of #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Per the Zacks proprietary methodology, stocks with this favorable combination offer good investment opportunities.
Image Source: Zacks Investment Research
monday.com (MNDY - Free Report) is benefiting from an expanding clientele driven by growing cross-selling opportunities.
monday.com currently flaunts a Zacks Rank #1 and has a market cap of $8.29 billion. The Zacks Consensus Estimate for 2024 earnings has surged 61.7% over the past 60 days to $1.73 per share. MNDY shares have returned 57.3% in the past year.
Qualys (QLYS - Free Report) is riding on strong demand for its VMDR solution. This Zacks Rank #1 company is benefiting from an expanding clientele thanks to the strong adoption of cybersecurity asset management with external attack surface management and patch management solutions.
The consensus mark for Qualys’ 2024 earnings has increased 6.7% to $5.29 per share over the past 60 days. QLYS has a market cap of $7.22 billion and its shares have surged 76% in the past year.
Gitlab (GTLB - Free Report) is benefiting from a robust product portfolio that integrates AI-powered DevSecOps features into a single application to boost productivity. It enables businesses to create more reliable and functionality-packed mission-critical software.
This Zacks Rank #2 company’s platform improves engineering productivity and reduces software spend. Gitlab has a market cap of $9.8 billion.
GTLB shares have gained 43.3% in the past year. The consensus mark for fiscal 2025 earnings has jumped 126.7% over the past 60 days to 34 cents per share.
Fabrinet (FN - Free Report) is benefiting from strong demand for its next-generation optical interconnect for AI applications. This is expected to drive this Zacks Rank #2 company’s top-line growth this year.
Fabrinet currently has a market cap of $6.91 billion and its shares have returned 45.5% in the past year. The Zacks Consensus Estimate for its fiscal 2024 earnings has improved 2% over the past 60 days to $8.25 per share.
Smartsheet (SMAR - Free Report) is benefiting from an expanding customer base. This Zacks Rank #2 company ended third-quarter fiscal 2024 with an annual recurring revenue (ARR) of $981 million and more than 13.9 million Smartsheet users. SMAR had 59 customers with ARR above $1 million.
Smartsheet has a market cap of $6.52 billion and its shares have returned 23% in the trailing 12-month period. The consensus mark for fiscal 2025 earnings has jumped 20.3% over the past 60 days to 89 cents per share.