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3 under-the-radar mid-caps for your watchlist

Household name stocks such as BHP Billiton Limited (ASX: BHP), Bellamy’s Australia Ltd  (ASX: BAL) and Telstra Corporation Ltd (ASX: TLS) are consistently hitting the headlines.

But it pays to keep an eye on up-and-coming mid-cap stars too.

These 3 stocks are kicking goals quietly, and if they’re not already on your watchlist, they should be.

Bapcor Ltd (ASX: BAP)

Automotive afterparts distributor Bapcor Ltd is a $1.89 billion market cap company operating across 145 auto parts stores across Australia.

While its shares have been trending higher for a few months, a recent dip in price could signal a buy-in for investors stalking growth opportunities with low risks.

Bapcor has managed to grow its earnings per share by almost 20% over the last three years, with its dividend increasing by about the same over the period.

Its recently-released annual report highlighted the company’s NPAT growth of 32% to $86.5 million for FY18 as group revenue jumped 22% to $1.2 billion – equating to total shareholder returns of 275% – a fair way above the S&P/ASX 200 average return of 58%.

There’s always the ultimate risk of the advent of electrical cars rendering a lot of Bapcor’s business redundant, but let’s admit, widespread uptake of this is still pretty unlikely for some time.

For now, Bapcor has had a stellar FY18 and the future looks bright.

Qube Holdings Ltd (ASX: QUB)

Import and export logistics services group Qube Holdings Ltd has shown some share price weakness of late, slipping down from a 52-week high of $2.80 in late August to sit at $2.43 at the time of writing.

So does this signal a buy-in opportunity for punters?

Possibly.

With a market cap of $3.87 billion, Qube has delivered some strong profit growth, with underlying revenue up 9.1% to $1.6 billion for FY18, underlying EBITDA growth of 3.6% to $164.8 million and an underlying NPAT increase of 4.5% to $106.8 million.

Qube delivered good growth across all divisions with strengths in the mining, forestry and imported vehicles markets boosting earnings.

Its logistics division was hit by some headwinds over the year, with low grain volumes a result of drought conditions and stiff competition in the domestic transport environment.

I think the short-term weakness in share price constitutes a buy-in opportunity for those who have done their due diligence.

Qube looks robust.

ALS Ltd (ASX: ALQ)

With a market cap of just over $4 billion, global provider of testing and analytical laboratory services, ALS Ltd, has been strengthening its financial position over the last couple of years and looks to be in a solid position at present.

ALS divested its oil and gas services business last year and made some life sciences acquisitions with the surplus – namely three separate strategic uptakes totalling $18 million across Brazil, USA, and Italy.

The future looks bright for ALS Ltd with its involvement in the burgeoning food quality assurance industry and its FY18 summary delivered NPAT growth of 21.1%, EBITDA growth of 12.3%, revenue growth of 14.7% and EPS increase of 21.9%.

With plans to continue to make targeted acquisitions, future growth is likely for ALS and the company is well-positioned to support the growing industrial sector.

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Motley Fool contributor Carin Pickworth owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Bapcor and Telstra Limited. 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 Scott Phillips.

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