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The top 10 mid cap stocks to add to your watchlist

Top 10 - 3d illustration on white background

Over the past year falls in the share prices of the big four banks, the supermarkets and the big miners have seen the S&P/ASX 20 index crash down more than 10%.

What might be astonishing to readers is that over the same period, the S&P/ASX MidCap50  (Index: ^AXMD) (ASX: XMD) has soared 14%. This index represents the bottom 50 stocks in the S&P/ASX 100, with market caps ranging from $1.4 billion to $12.4 billion.

Here’s my top 10 picks out of those 50 stocks…

Company Market Cap Last Price 12 Month move
ResMed Inc. (CHESS) (ASX: RMD)    11,869.9            8.83 16%
TPG Telecom Ltd (ASX: TPM)    10,062.9          12.28 33%
REA Group Limited (ASX: REA)      8,099.1          64.58 49%
Cochlear Limited (ASX: COH)      6,954.1       128.94 44%
Vocus Communications Limited (ASX: VOC)      4,474.2            8.58 45%
Challenger Ltd (ASX: CGF)      4,100.0            9.10 28%
Magellan Financial Group Ltd (ASX: MFG)      3,370.6          22.24 19%
Flight Centre Travel Group Ltd (ASX: FLT)      3,091.5          32.51 -9%
Carsales.Com Ltd (ASX: CAR)      2,961.0          12.45 17%
Sirtex Medical Limited (ASX: SRX)      1,458.2          31.20 -1%

Source: S&P Global Market intelligence

Interestingly, many of those companies also appeared on my top 10 superstar blue chip companies on the ASX, thanks to their high returns on equity and strong earnings per share growth over both 5 and 10 years.

The strong performance of the mid-cap index also suggests many of those companies – including some of those stocks above – could grow into Australia’s top 50 largest companies over the next few years.

The results also show that strong companies generate high returns and high growth – and in most cases, shareholders are rewarded with higher share prices and capital gains.

Foolish takeaway

Investors could do worse than to dig deeper into the 10 companies above. Not all are cheap at current prices, but any pullback could be an opportunity to jump in.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Mike King owns shares of Cochlear Ltd., Flight Centre Travel Group Limited, ResMed Inc., Sirtex Medical Limited, TPG Telecom Limited, and Vocus Communications Limited. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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