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.
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 avoid and some other investments you should consider instead.
Bentley Systems (BSY)
Market Cap: $12.13 billion
Pioneering the concept of "digital twins" for infrastructure projects long before it became an industry buzzword, Bentley Systems (NASDAQ: BSY) provides software solutions that help engineers design, build, and operate infrastructure projects across sectors including roads, bridges, utilities, mining, and industrial facilities.
Why Does BSY Worry Us?
- Customers had second thoughts about committing to its platform over the last year as its average billings growth of 10.9% underwhelmed
- Projected sales growth of 9.8% for the next 12 months suggests sluggish demand
- Operating profits and efficiency rose over the last year as it benefited from some fixed cost leverage
At $38.59 per share, Bentley Systems trades at 8.1x forward price-to-sales. If you’re considering BSY for your portfolio, see our FREE research report to learn more.
Yum China (YUMC)
Market Cap: $17.17 billion
One of China’s largest restaurant companies, Yum China (NYSE: YUMC) is an independent entity spun off from Yum! Brands in 2016.
Why Are We Hesitant About YUMC?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Gross margin of 20.1% is below its competitors, leaving less money for marketing and promotions
- Earnings per share lagged its peers over the last six years as they only grew by 5.5% annually
Yum China is trading at $48.51 per share, or 17.4x forward P/E. To fully understand why you should be careful with YUMC, check out our full research report (it’s free).
Clean Harbors (CLH)
Market Cap: $13.91 billion
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Are We Wary of CLH?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Estimated sales growth of 3.3% for the next 12 months implies demand will slow from its two-year trend
- Earnings per share lagged its peers over the last two years as they only grew by 5% annually
Clean Harbors’s stock price of $259.82 implies a valuation ratio of 33.2x forward P/E. Read our free research report to see why you should think twice about including CLH in your portfolio.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
