Most investors like following the large-cap stocks which you can find in the S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO). However, mid-cap stocks can produce some very strong share price gains and can be more nimble in business expansion because they're not too big to manage.
You still need to look for quality companies and not market punts. Below are three mid-cap companies that have steady growth and could be solid earners for your portfolio.
First, take a look at Perpetual Limited (ASX: PPT), the fund and wealth manager. It raised FY 2014 full year earnings to around $81.6 million, or 34% up on the same period last year. In addition to the great success it has had regularly with Australian equities, the company plans to grow its business with its new Perpetual Global Share Fund and Perpetual Equity Investment Company, taking advantage of rising international markets. Perpetual gets two benefits. Investments in international stocks can possibly produce higher returns as the US market is hitting all-time highs.
M2 Group Ltd (ASX: MTU) is another that has moved up successfully. Through several acquisitions over the past two years, the company now operates Dodo Internet Service Provider and iPrimus along with its Commander service. Its stock has risen 46% over the past year. One concern is how earnings would be like from just organic growth. After the recent acquisitions have been fully integrated, what will the company do to keep up high earnings? Following high-double digit revenue and earnings growth in the past, over the next two years consensus forecasts are for earnings to grow about 7%. It's okay to keep it in your watchlist, but maybe it's a little early for a big stock move.
Carsales.Com Ltd (ASX: CRZ), the operator of the number one car sales search website sees great growth potential in developing countries with large car markets. Its strategy is to invest into established companies in target countries, build up the individual brand and steadily increase its stake holding as the target company successfully grows. It's now part owner of the number one car search websites in Brazil and South Korea. The stock trades at 25 times earnings and pays a 3.2% fully franked yield. This is a steady grower you can rely on.
