"Large-cap growth stocks have dominated for so long because most investors have stopped looking at anything else. The thinking here is pretty simple in that why would you bother with mid-caps or small-caps when you can own the Magnificent Seven and watch your portfolio compound by double digits annually. The thing is, this thinking is showing signs of cracks as mega-cap valuations are stretched,"
"Mid-cap stocks occupy a sweet spot that large caps and small caps do not as they're large enough to have established business models, competitive moats, and access to capital markets. On the other hand, they are small enough to grow faster than mega-caps that are already saturating their addressable markets. The valuation gap between large-cap growth and mid-cap value is historically wide, which means it's an area of opportunity."
Mega-cap growth dominance has concentrated investor capital, but stretched valuations and slowing earnings growth limit future upside from 30–40x earnings multiples. Mid-cap value companies, typically with $2–$10 billion market caps, trade at more reasonable multiples and have been relatively ignored. Mid-caps combine established business models, competitive moats, access to capital, and higher growth potential than saturated mega-caps. Many trade around 12–15x earnings with 3–5% dividend yields and have long dividend-growth track records, offering income, downside protection, and attractive total-return potential if capital rotates away from mega-cap leaders.
Read at 24/7 Wall St.
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