To be a successful investor requires work. We can't just buy blue-chips and hope for the best. We need to look a little bit further down the market capitalisation ladder and into the operations of companies who pose the greatest likelihood of outperforming the market in the long-term. Mid-cap stocks provide us with this opportunity.
Many of the following mid-caps have produced truly spectacular dividends over the years and notched-up equally impressive capital gains for savvy investors. They prove that as long as you do your research, you don't have to sacrifice on quality. Here are four top mid-cap stocks ideas for your portfolio.
Less risk
Village Roadshow Limited (ASX: VRL) is a name synonymous with cinemas and blockbuster films. Recently it has produced some box office hits such as The Great Gatsby and The Hobbit. However, its theme parks are also extremely profitable. These include assets such Warner Bros. Movie World, Wet'n'Wild and Sea World. At current prices the company yields 4.5% and trades on modest earnings multiples.
Another household name is Slater & Gordon Limited (ASX: SGH). Australia's premier personal injury law firm. Recently the company has realised the value of doing business in the UK via a succession of acquisitions and has also expanded its range of services here in Australia. It, along with Shine Corporate Ltd (ASX: SHJ), is quickly proving lawyers can be great business managers. It yields a 1.6% dividend and trades on a price-earnings ratio of 16.
More Risk
As far as competent managers go, the team at Tassal Group (ASX: TGR) seem to be doing an effective job at changing the company's target market groups from international to domestic. That seems like a tall order for any CEO. However in its most recent full-year, the company notched-up 42% profit growth on flat revenues. It boasts robust balance sheets and, in my opinion, is a great long-term soft commodities investment.
Lastly, Donaco International Ltd (ASX: DNA) is a casino operator with its flagship project in Lao Cai, Vietnam. It has a market capitalisation of $550 million but boasts potential to go much higher in the next three years. In its most recent half-year report, operating revenue jumped 100% while EBITDA was 48% higher. It is currently undertaking a massive renovation of its casino to transform it into a huge resort complex, due for a soft opening by mid-2014. Recently it did a capital raising to fund potential acquisitions as it seeks to diversify its revenue stream.
Foolish takeaway
Although there are no rewards for being unique, investors shouldn't focus solely on the biggest names listed on the stock exchange. Each of these four companies are likely to grow earnings strongly in coming years and could easily fit into a well-diversified portfolio.
