Mid-cap stocks sometimes get overlooked because they are often past the exciting early days that lure growth investors but aren’t yet large enough to garner widespread investor attention. Investors can simply miss the long-term opportunities these types of stocks offer because they are frequently provided very little Wall Street coverage.
That’s a shame in many cases because mid-cap stocks can still have plenty of growth ahead of them…
Misunderstood drug-maker Amarin (NASDAQ:AMRN), taser maker turned software-as-a-service company Axon Enterprises (NASDAQ:AAXN), and precious-metals focused Royal Gold (NASDAQ:RGLD) are all great examples of mid-cap stocks that deserve a little extra investor attention right now. Here’s a primer from three Motley Fool contributors.
A mid-cap biopharma with room to run
George Budwell (Amarin): Mid-cap biopharma stocks can be outstanding growth vehicles. These companies usually have at least one product on the market and therefore have passed through the eye of the needle in terms of the enormous risk posed by key clinical-trial readouts.
Amarin, for instance, is a mid-cap biopharma play that has a Food and Drug Administration-approved omega-3 treatment, Vascepa, on the market. The drug’s sales are set to kick into hyperdrive soon due a positive readout from its large cardiovascular-outcomes trial known as REDUCE-IT. The best part of this story, however, is that the market has yet to fully price in Vascepa’s commercial opportunity as an add-on to statin therapy in patients at risk of cardiovascular disease.
Why is the market doubting Vascepa’s commercial potential? Skeptics have knocked the drug because the mineral oil placebo used in REDUCE-IT may not have been totally inert. So the claim is that Vascepa’s 25% relative risk reduction of serious cardiovascular events observed in this trial might be overstated.
But even an incremental decrease in Vascepa’s cardioprotective benefit — stemming from this debatable placebo issue — shouldn’t be enough to derail a label expansion for this high-value indication. Vascepa fills an important gap in care for cardiovascular disease patients, and it’s hard to argue otherwise based on the currently available data.
Where is this stock headed? With sales forecast to top at least $2 billion in the next decade, Amarin’s shares should have no problem pushing past their current range, once Vascepa’s label is officially expanded early next year (assuming no unexpected hiccups with the FDA). It may take some time for the market to fully recognize Vascepa’s value proposition, but this growth story definitely has legs.
Big releases of new services are on the horizon
Brian Stoffel (Axon Enterprises): I wouldn’t blame anyone who follows my writing to think I’m a little obsessed with Axon. I have repeatedly called it out as one of the best mid-cap stocks to buy. But there’s a reason for that: I’m fully convinced the company’s new slate of services will spur huge growth in the decade ahead.
For those who are unfamiliar, Axon used to be known as…
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