U.S. stock markets have been experiencing a decline in April following a strong rally over the past 15 months. The excitement surrounding the first rate cut by the Fed last June has diminished as the yield on the 10-Year U.S. Treasury Note has risen to around 4.5%.
The rise in the yield can be attributed to persistent inflation despite tight monetary policies and high interest rates over the past two years. Currently, the CME FedWatch indicates a low 17% probability of a rate cut in June, with most respondents now anticipating the first rate reduction to occur in September.
In recent weeks, 15 Fed officials have expressed reluctance to implement a rate cut, although many still believe that there will be at least one 25 basis point cut this year. Market participants are also concerned about the Fed’s ability to achieve a “soft landing” for the economy.
Investing in mid-cap stocks is often viewed as a smart strategy for portfolio diversification. These stocks offer a blend of the benefits of both small and large-cap stocks. Top-ranked mid-cap stocks have the potential to increase profitability, productivity, and market share, and may even grow into large-cap stocks over time.
Mid-cap stocks are less vulnerable to losses in the event of a slowdown in economic growth compared to large-cap stocks due to their lower exposure to international markets. On the other hand, if the economy continues to grow, mid-cap stocks stand to benefit more than small caps due to factors such as established management teams, brand recognition, and access to capital markets.
DailyBubble’s top picks for mid-cap stocks with strong potential for 2024 include Allison Transmission Holdings Inc. (ALSN), SM Energy Co. (SM), Lancaster Colony Corp. (LANC), Primerica Inc. (PRI), and Jackson Financial Inc. (JXN). These stocks have seen positive earnings estimate revisions in the past 60 days and hold either a Zacks Rank #1 (Strong Buy) or 2 (Buy).
ALSN, for example, achieved record sales in 2023 and expects continued strong performance this year. Similarly, SM Energy is focused on expanding its oil-centered operations, while Lancaster Colony Corp. is a manufacturer of specialty food products. Primerica Inc. provides financial products and services, and Jackson Financial Inc. offers annuities to retail investors.
DailyBubble recommends considering these mid-cap stocks for potential growth and diversification in your investment portfolio.