The sometimes-forgotten sweet spot between small cap and large caps, mid cap stocks can be an important part of a diversified portfolio. Mid caps can offer the “best of both worlds” – between the stability commonly found in large caps and the growth potential (but higher risk) commonly found in small cap stocks.

Where Can I Find a List of Mid Cap Stocks?

Magnifi has a vast assortment of mid cap stocks to choose from and finding those right for you can be as easy as conducting an internet search or texting a friend. Magnifi was designed to help you easily uncover those same investments that may have alluded you before, all 

What is a Mid Cap Company and Where Can I Find a Mid Cap Definition?

To explain a mid cap, we should first explain market capitalization. Market capitalization, or market cap, is the total value of a publicly traded company. Market cap is calculated by multiplying the total number of shares outstanding of a company by the current share price. 

If a company has 10 million shares outstanding and the current price of those shares is $40 per share, that company has a market cap of $400,000,000. Mid cap companies have a market cap of between $2 billion and $10 billion.

A mid-cap company falls in the middle between large-cap (or big-cap) and small-cap companies. For comparison, small cap companies can be between $300 million and $2 billion in size and large cap companies have a market cap of over $10 billion dollars. Anything with a market cap of less than $300 million is considered micro-cap.

Mid cap companies tend to be substantial firms with solid businesses, with an established foothold in their respective market. Mid caps are often domestic or niche companies that are looking to expand. Since mid-cap stocks may offer both 

 and price appreciation (an increase in value), they can balance investment portfolios between income (investments that pay dividends) and growth (investments that increase in value). 

In effect, mid-caps offer a compromise between the growth, risk and volatility trade-offs of their larger and smaller counterparts.

How Can I Choose Which Mid Cap Stocks to Buy?

Whether you're looking to buy mid cap stocks individually or would prefer to a buy mid cap ETF, rest assured that you may already be familiar with some mid cap companies.

If you're looking into ETFs, there are a wide variety of mid cap ETFs to choose from, but some of the most common are mid cap growth ETFs. Mid cap growth ETFs target U.S. firms that are projected to grow faster than other mid-cap stocks, therefore commanding relatively higher prices.

For a tangible example, here are a few mid cap companies you might have heard of: 

Your search doesn’t have to stop at “mid cap funds” or “mid cap companies.” Magnifi's search bar can help you find companies with specific market capitalizations.

Benchmarks are helpful tools used to create a standard of performance and allow an investor to compare the performance of their investment to what “should” be happening with that investment. There are two main benchmarks for mid-cap stocks:

This index tracks the performance of 400 mid-sized U.S. companies with valuations between about $2 billion and $8 billion.

This index tracks nearly twice as many companies as the S&P index — more than 800 — and is a subset of the larger Russell 1000 Index.

When you look at the performance of a mid cap stock or fund, you can compare the performance against the benchmark.

It's impossible to define what the "best" mid cap companies are, but as you can see from the above, there are already many indexes dedicated to some of the best performing mid caps.

When it comes to market capitalization, there are a couple different choices depending on the size of the companies you are looking to invest in. Everyone knows the large and large-cap stocks, Apple (AAPL), Microsoft (MSFT), and Google (GOOGL), but the stocks less known among investors tend to be in the small to mid-cap range. 

However, what makes a stock a mid cap vs small cap? It all comes down to how much the company is worth. The way you find a companies market capitalization is multiplying the stock price by the number of outstanding shares.

Small caps are companies that are worth $300 million to $2 billion, whereas mid cap stocks are companies worth $2 billion to $10 billion. That quite the jump in size, but its good to have a share of both in your portfolio as oftentimes, these companies still have a lot of room to grow.

According to Hennessy Funds, the longer mid-cap stocks are held, the more likely they are to outperform -- 69% of the time, mid-caps outperformed small-cap and large-cap stocks over any 10-year rolling period in the past 20 years (1).

 (using Morningstar data) says that, “not only have mid-cap stocks generated higher absolute returns over a longer time frame, but they have also provided these returns with less 

The outperformance of mid-caps stems from the fact that many of these companies exhibit solid growth, either as they expand overseas or into new products and services. Historically, mid-cap companies offer one of the best ways to profit from an economic recovery. That is a result of their large exposure to the industrial sector.

According to research by John Hancock Investing, “after the early 2000s recession, mid-cap equities outperformed large caps for three consecutive years – 2003 through 2005. Similarly, mid-caps performed well after the global financial crisis, beating large caps four out of five years from 2009 through 2013” (3).

When deciding if or which mid cap stock to add to your portfolio, your individual asset allocation should always be based on your risk tolerance and your investment goals. To invest in a mid cap, you can either invest in the stock of a specific mid cap company or invest in a mid cap fund. 

The fund will give you added diversity and allow you to invest in many mid caps at once. There are about 

 that invest in mid cap companies. By doing so, you can reduce the risk associated with owning any individual stock while positioning your portfolio to benefit from broader market gains.

You can find funds that track key mid-cap benchmarks, styles of investing like growth versus value and mid-caps in specific industries. Try searching for the following:

Mid Cap Funds with Exposure to Industrials

Hennessy, Neil; Kelley, Ryan; and Wein, Joshua, The Power of Mid-Caps, Hennessy Funds, September 2022, https://www.hennessyfunds.com/insights/midcap-investment-idea

Roland, Emily and Miskin, Matthew, “Midcycle investing: a guide to portfolio construction,” John Hancock Investment Management, https://www.jhinvestments.com/resources/all-resources/education/midcycle-investing-a-guide-to-portfolio-construction

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