Stock market’s overall performance, as a basket of stocks, appears to be dependent on several factors. Even though certain sector-specific fluctuations are dependent on industry-specific forces, stocks perform well in a business climate which is friendly, and they might decline and offset the returns when the economic environment is uncertain. If we talk about US stock market in 2023, it seem that there is significant uncertainty which is not yet gone as a result of historic economic and political crises. These issues continue to bring uncertainty into the US equity market. During the friendly economic environment, best global mid cap global companies tend to perform well and, in some cases, they can also outperform the returns delivered by blue-chip stocks.
Weakening economy or difficult economic conditions bring the stock prices down as a whole. Now, this performance is completely unrelated to the firm’s fundamentals. The decline in the stock prices is solely on the basis of weaker sentiments of the investors. Investing in some of the best global mid cap companiescomes with a range of advantages. Mid-cap companies are the ones having market capitalization of between $2 billion – $10 billion. Such companies sizeable and stable, having relatively mature business operations. At the same time, share prices and market caps of these companies are lower against the companies mega cap or large cap stocks. Therefore, such companies have a significant untapped potential for large percentage returns. Mid-cap stocks protected against market manipulation by unethical players because of their higher share prices in comparison to the small cap and micro-cap stocks.
With this in mind, let us now have a look at some of the best global mid cap companies to buy right now.
1. United States Steel Corporation
The company operates mainly in the US, buy has a steelmaking capacity in Slovakia.
In 2Q23, the company saw net earnings of $477 million, or $1.89 per diluted share and adjusted net earnings of $483 million, or $1.92 per diluted share. Its 2Q23 results were supported by strong growth in Mini Mill segment in both adjusted EBITDA and EBITDA margin as compared to 1Q23.
United States Steel Corporation generated $713 million of cash from operations in 2Q23, with its free cash flow coming at $101 million. As the result, the company has further strengthened its balance sheet. Its in-flight strategic projects are fully financed and the company continues to prioritize direct returns consistent with its capital allocation framework. In the 2Q, it has returned $86 million to stockholders in the form of buybacks and dividends.
The company continues to execute well against its strategic initiatives, as all of its in-flight projects progressed on-time and on-budget. Its non-grain oriented, or NGO, electrical steel line at Big River Steel is getting commissioned. It is expected to start later in 3Q23.
The company expects adjusted net earnings per diluted share in 3Q23 of $1.10 – $1.15, with adjusted EBITDA to be ~$550 million. It continues to be on track to safely deliver strong 3Q, with each of the company’s operating segments outperforming previous estimates and resulting in healthy adjusted EBITDA for the company. It expects to end 3Q with cash on hand of ~$3 billion and its total liquidity should exceed $5 billion for 7th consecutive quarter.
2. Reinsurance Group of America, Incorporated
It is an insurance holding company, which has its operations in the United States, Latin America, Canada, Europe, etc. Core products and services of the company are life reinsurance, living benefits reinsurance, group reinsurance, health reinsurance, etc.
In 2Q23, the company saw net income available to its shareholders of $205 million, or $3.05 per diluted share, in comparison to $105 million, or $1.55 per diluted share, in the same quarter of the prior year. Adjusted operating income for 2Q23 came in at $297 million, or $4.40 per diluted share, against $316 million, or $4.67 per diluted share, in the year before quarter.
In comparison to year-ago period, excluding spread-based businesses, the company’s 2Q investment income declined by 1.0%, exhibiting lower variable investment income, which was partially offset by the increased yields. Average investment yield fell to 4.42% in 2Q from 4.63% in the same quarter of the prior year as a result of lower variable investment income, which was partially offset by higher yields.
The company closed 2Q on a strong note as most regions and business lines performed significantly well. This highlighted its differentiated, diversified and valuable global franchise. The company expects strong momentum in new business activities, both in organic and in-force transactions. Balance sheet of the company remained strong and it expects to benefit from increased yield environment while maintaining the risk discipline.
3. Ciena Corporation
The company is a network strategy and technology company. During 3Q23, it saw revenues of $1.07 billion and it repurchased ~1.4 million shares of common stock for aggregate price of $61.2 million.
For 3Q23, it saw revenues of $1.07 billion in comparison to $868.0 million for 3Q22 and its GAAP net income came in at $29.7 million, or $0.20 per diluted common share. Cash and investments of the company totalled $1.28 billion, with cash flow from operations coming at $8.7 million.
Analysts at Evercore ISI initiated the coverage of the stock, raising price objective from $47.00 to $52.00. It gave the company an “in-line” rating on September 1st. Bank of Montreal Can increased its holdings in shares of the company by 0.6% in the 1st quarter. It now owns 36,296 shares of the company worth $2,227,000.
Conclusion
Above are some of the best global mid cap companies which investors can consider buying in the current environment. One reason that value stocks can be the right choice these days is because of the uncertain economic environment in the US. While above are some of the best global mid cap companies, there are several other value stocks which are expected to perform well.
Stock prices of the mid cap companies will be impacted by numerous factors and the impact will not be because of their fundamentals. Thus, picking the right undervalued stocks can provide healthy returns.
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