Best mid-cap retail stocks to invest in Q3 2024

The mid-cap retail sector continues to offer exciting opportunities for investors, combining the agility of smaller companies with the stability of more established firms. As consumer trends evolve, these companies are well-positioned to capitalize on new demands, driving growth and market share expansion.

e.l.f. Beauty has emerged as a fast-growing player in the cosmetics industry, known for its affordable, high-quality products that resonate with younger consumers. Group 1 Automotive, one of the largest automotive retailers, benefits from strong demand in the auto market and strategic expansion initiatives. Cavco Industries, a leader in factory-built homes, is capitalizing on the rising demand for affordable housing solutions across the U.S.

These mid-cap retail companies offer diverse opportunities for growth in an evolving market landscape. Explore our expert insights to discover the best mid-cap retail stocks to invest in for Q3 2024.

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Before we dive into each company, let`s take a look at how your investment would have performed if you had invested in top 10 stocks mentioned in this article 5 years ago.

Now, let`s take a closer look at each of the companies:

  • e.l.f. Beauty (ELF)

    In the dazzling realm of lipsticks and eyeshadows, where brushes pirouette and pigments whisper trends, e.l.f. Beauty is no longer the shy newbie in the corner. This affordable cosmetics player isn't just crafting glittery dreams; it's wielding a strategic brushstroke, redefining beauty standards and disrupting the industry with its accessible price point and on-trend offerings.

    e.l.f. Beauty financial statements

    Analysts recommendation: 104.01

    Financial Health

    • Return on assets (ROA): -12.35%
    • Return on equity (ROE): 13.13%
    • Return on investment (ROI): 20.8%

    Profitability

    • Gross margin: 13.64%
    • Operating margin: 12.57%
    • Net profit margin: 10.8%

    Growth

    • EPS (past 5 years): 25.97%
    • EPS (current): N/A
    • EPS estimate (next quarter): 2.1
    • EPS growth (this year): 0.44%
    • EPS growth (next year): 10.59%
    • EPS growth (next 5 years): 47.62%
    • EPS growth (quarter-over-quarter): 49.99%
    • Sales growth (past 5 years): 16.67%
    • Sales growth (quarter-over-quarter): 33.2%

    💡 Why invest in e.l.f. Beauty?

    Beyond the $5 lipstick and drugstore shimmer, e.l.f. Beauty offers investors a compelling proposition. This indie cosmetics darling has redefined affordability in the beauty world, carving out a loyal following and disrupting the market. Let's dive into why e.l.f. might be the next beauty breakthrough in your portfolio.

    • Affordability Arsenal: e.l.f. reigns supreme in the budget beauty space, catering to a broader, ever-expanding customer base, offering high-quality makeup at accessible prices, boosting market share and brand loyalty.
    • Trend-Hunting Titan: e.l.f. boasts a nimble and agile team, constantly adapting to evolving trends and social media-driven consumer preferences, ensuring its offerings stay fresh, relevant, and in-demand.
    • Digital Detoxification Diva: Embracing online platforms and influencer marketing, e.l.f. bypasses traditional advertising costs, building a direct and engaged community, boosting brand awareness and customer connections.
    • Sustainability Striver: e.l.f. commits to environmentally conscious packaging and cruelty-free practices, aligning with investor preferences for ethical companies and attracting a value-conscious customer base.

    🐌 Key considerations before investing in e.l.f. Beauty

    Glitter and glamor come with caveats. While e.l.f.'s price tag may initially entice, navigating the competitive beauty landscape, particularly with rising inflation and sustainability concerns, requires a closer look. Before adding a dash of e.l.f. to your investment mix, let's examine the potential obstacles to its shine.

    • Valuation Concerns: Like many emerging growth companies, ELF's stock currently sits near all-time highs, demanding a cautious approach due to potentially limited immediate gains. A patient, long-term perspective might be wise.
    • Profitability Pinch: Lower price points and fierce competition in the beauty space can strain margins, demanding close analysis of e.l.f.'s cost-cutting strategies and ability to maintain profitability.
    • Brand Perception Hurdles: Shifting from budget brand to mainstream player might pose challenges, requiring strategic marketing and product development to shed potential 'cheap' and 'low-quality' associations.
    • Economic Woes Woes: Consumer spending on non-essential items like cosmetics can decline during economic downturns, impacting e.l.f.'s sales and future performance.

    Final thoughts on e.l.f. Beauty

    e.l.f.'s affordability advantage, trend-chasing agility, digital prowess, and sustainability commitment paint a potentially captivating picture for investors seeking exposure to the dynamic beauty sector. However, near-peak valuation, potential profitability challenges, brand perception hurdles, and economic sensitivity warrant a measured approach. Thorough research, analysis of e.l.f.'s future plans and market dynamics, and a clear understanding of your risk tolerance are crucial before adding this colorful contender to your portfolio. Remember, navigating the ever-evolving landscape of beauty stocks demands both a discerning eye for trendy palettes and a balanced perspective on potential market stumbles. Choose wisely, and your portfolio might just blush with the rewards of e.l.f.'s budget-friendly revolution.

  • Murphy USA (MUSA)

    On the bustling American highways, where gas stations dot the landscape and engines hum, Murphy USA (MUSA) stands as a familiar sight. This prominent American corporation isn't just another gas station; it's a strategic player in the retail petroleum market, offering low-cost fuel and convenience store essentials to motorists across the nation. But can Murphy USA translate its widespread presence and value proposition into rewarding returns for your investment portfolio? Let's explore the hidden reserves fueling Murphy's growth, alongside the potential challenges to consider before joining this high-octane expedition.

    Murphy USA financial statements

    Analysts recommendation: 482.62

    Financial Health

    • Return on assets (ROA): 14.92%
    • Return on equity (ROE): 12.24%
    • Return on investment (ROI): 67.67%

    Profitability

    • Gross margin: 17.29%
    • Operating margin: 3.73%
    • Net profit margin: 2.5%

    Growth

    • EPS (past 5 years): 14.96%
    • EPS (current): 0.36
    • EPS estimate (next quarter): 24.74
    • EPS growth (this year): 6.75%
    • EPS growth (next year): -6.06%
    • EPS growth (next 5 years): 31.53%
    • EPS growth (quarter-over-quarter): -2.39%
    • Sales growth (past 5 years): 8.59%
    • Sales growth (quarter-over-quarter): 11.79%

    💡 Why invest in Murphy USA?

    Murphy USA's compelling profile makes it a tempting pick for investors seeking exposure to the dynamic retail and gas station sector. Here are some key factors fueling its appeal:

    • Low-Cost Leader: Murphy USA prides itself on offering consistently low gas prices, attracting value-conscious consumers seeking to stretch their fuel budget further. This focus on affordability positions the company for success in a competitive market.
    • Beyond the Pump: Recognizing the diverse needs of on-the-go customers, Murphy USA expands its offerings beyond traditional gas stations, venturing into the realm of convenience stores. This strategic diversification mitigates risk by offering additional revenue streams beyond just fuel sales.
    • Strategic Locations: Murphy USA strategically positions its stores in high-traffic areas, often adjacent to Walmart locations, maximizing convenience and customer footfall. This targeted approach ensures easy access for motorists and leverages the existing traffic generated by its retail partner.
    • Digital Edge: Murphy USA embraces the digital age, leveraging a user-friendly app to offer exclusive deals, fuel rewards, and convenient payment options. This focus on mobile engagement enhances customer experience and loyalty.

    🐌 Key considerations before investing in Murphy USA

    While Murphy USA navigates the dynamic gas station landscape with its value proposition and strategic locations, there are some potential roadblocks to consider before joining this high-stakes journey:

    • Volatile Gas Prices: Fluctuations in global oil prices can significantly impact Murphy USA's profitability. Monitoring global energy markets and potential hedging strategies employed by the company is crucial.
    • Competition Heats Up: Established convenience store chains and other gas station operators are constantly vying for market share, challenging Murphy USA's position. Staying informed about industry trends and how Murphy USA plans to maintain its competitive edge is important.
    • Economic Sensitivity: Downturns in the economy can lead to reduced consumer spending on both fuel and convenience store items, impacting Murphy USA's sales. Keeping an eye on economic indicators is essential for understanding potential market fluctuations.
    • Regulation Roundup: Evolving regulations surrounding environmental standards and fuel quality can impact Murphy USA's operations and necessitate costly compliance measures. Staying informed about regulatory developments and the company's adaptation strategies is key.

    Final thoughts on Murphy USA

    Murphy USA's focus on low-cost fuel, convenience store offerings, strategic locations, and digital engagement paint a potentially promising picture for long-term investors seeking exposure to the dynamic retail and gas station sector. However, the volatile nature of gas prices, rising competition, economic sensitivity, and evolving regulations necessitate a cautious approach...

  • Group 1 Automotive (GPI)

    In the high-octane world of automobile dealerships, where shiny cars attract and fierce competition revs engines, Group 1 Automotive aims to shift gears towards success. This international dealership group isn't just selling cars; it's orchestrating a multi-brand symphony, offering diverse vehicles across numerous manufacturers. But can this automotive maestro translate its dealership expertise into rewarding returns for your portfolio? Let's explore the hidden horsepower propelling Group 1's rise, alongside the potential potholes to consider before joining this automotive expedition.

    Group 1 Automotive financial statements

    Analysts recommendation: 359.27

    Financial Health

    • Return on assets (ROA): -15.55%
    • Return on equity (ROE): 6.7%
    • Return on investment (ROI): 20.26%

    Profitability

    • Gross margin: 10.18%
    • Operating margin: 4.97%
    • Net profit margin: 2.97%

    Growth

    • EPS (past 5 years): 4.44%
    • EPS (current): 0.53
    • EPS estimate (next quarter): 40.39
    • EPS growth (this year): 10.36%
    • EPS growth (next year): -10.96%
    • EPS growth (next 5 years): 40.41%
    • EPS growth (quarter-over-quarter): 3.03%
    • Sales growth (past 5 years): -2.33%
    • Sales growth (quarter-over-quarter): 9.9%

    💡 Why invest in Group 1 Automotive?

    Group 1's compelling profile makes it a tempting pick for investors seeking exposure to the dynamic automotive retail sector. Here's what fuels its multi-brand engine:

    • Dealership Diversity: Group 1 boasts a vast network of over 200 dealerships across the UK and the US, representing over 30 renowned brands like Audi, BMW, Toyota, and Ford. This brand diversification mitigates risk and caters to diverse customer preferences.
    • Beyond the Showroom: Recognizing the evolving retail landscape, Group 1 expands its offerings, venturing into online sales platforms and used car sales, providing convenience and affordability to customers. This strategic evolution caters to changing consumer behavior.
    • Growth Potential: With operations spanning international markets and plans for further expansion, Group 1 unlocks promising growth opportunities in emerging markets and untapped segments. This global reach positions it for future success.
    • Customer Focus: Group 1 prioritizes a customer-centric approach, investing in after-sales services, loyalty programs, and digital engagement. This focus on customer satisfaction fosters brand loyalty and repeat business.

    🐌 Key considerations before investing in Group 1 Automotive

    While Group 1 navigates the dealership labyrinth with its diverse brands and customer focus, there are some potential roadblocks to consider before joining this high-stakes journey:

    • Valuation Concerns: Like many automotive companies, G1A's stock can be volatile, reflecting expectations of future car sales, economic conditions, and overall market sentiment. A cautious approach with a patient, long-term perspective is wise.
    • Competition Heats Up: Established manufacturers and independent dealerships are vying for market share, challenging Group 1's dominant position. Stay informed about industry trends and how Group 1 plans to maintain its competitive edge.
    • Economic Jitters: Global economic downturns can impact consumer spending on discretionary items like cars, potentially hitting Group 1's profitability. Close monitoring of economic trends and their impact on the automotive sector is crucial.
    • Inventory Management: Fluctuations in vehicle supply and demand can impact profitability, requiring skillful inventory management. Monitoring industry trends and Group 1's inventory strategies is important.

    Final thoughts on Group 1 Automotive

    Group 1's diverse brand portfolio, international reach, focus on online sales and used cars, and customer-centric approach paint a potentially promising picture for long-term investors seeking exposure to the dynamic automotive retail sector. However, the volatile nature of the stock, rising competition, economic sensitivity, and inventory management challenges warrant a measured approach. Thorough research, analysis of Group 1's future plans and the automotive landscape, and a clear understanding of your risk tolerance are crucial before joining this automotive expedition. Remember, navigating the intricate terrain of automotive stocks requires both a discerning eye for market trends and a balanced perspective on potential challenges. Choose wisely, and your portfolio might just find itself riding smoothly alongside the success story of Group 1 Automotive.

  • Cavco Industries (CVCO)

    Cavco Industries is a leading manufacturer and distributor of factory-built homes, modular homes, and recreational vehicles. The company offers affordable housing solutions for various demographics, including single-family homes, multi-family housing, and manufactured homes for recreational use.

    Cavco Industries financial statements

    Analysts recommendation: 422.98

    Financial Health

    • Return on assets (ROA): -22.31%
    • Return on equity (ROE): 10.67%
    • Return on investment (ROI): 14.15%

    Profitability

    • Gross margin: 13.51%
    • Operating margin: 8.93%
    • Net profit margin: 8.12%

    Growth

    • EPS (past 5 years): 21.53%
    • EPS (current): N/A
    • EPS estimate (next quarter): 17.16
    • EPS growth (this year): 4.76%
    • EPS growth (next year): 1.05%
    • EPS growth (next 5 years): 19.93%
    • EPS growth (quarter-over-quarter): 0.36%
    • Sales growth (past 5 years): 22.5%
    • Sales growth (quarter-over-quarter): 15.39%

    💡 Why invest in Cavco Industries?

    Cavco Industries offers several potential advantages for investors seeking exposure to the housing industry:

    • Essential Housing Solutions: Manufactured homes provide affordable housing options, making Cavco's products essential for many families.
    • Diversified Product Offering: The company's range of products caters to various housing needs, reducing reliance on any single product category.
    • Growth Potential: The demand for affordable housing and the increasing popularity of manufactured homes can drive growth for Cavco.
    • Geographic Diversification: Operating in multiple regions across the United States helps mitigate risks associated with regional economic fluctuations.

    🐌 Key considerations before investing in Cavco Industries

    However, before investing in Cavco, it's crucial to consider these potential challenges:

    • Economic Sensitivity: The housing market can be cyclical, impacting demand for manufactured homes.
    • Competition: The manufactured housing industry is competitive, with both established players and new entrants vying for market share.
    • Regulatory Environment: Building codes and zoning regulations can impact the construction and sale of manufactured homes.
    • Material Costs: Fluctuations in the price of materials used in manufactured homes can affect profitability.

    Final thoughts on Cavco Industries

    Cavco Industries' focus on affordable housing, diversified product offering, and growth potential make it an attractive investment for those seeking exposure to the housing industry. However, the cyclical nature of the housing market, competition, regulatory factors, and material costs necessitate careful consideration. Thorough research on Cavco's product pipeline, market expansion plans, and financial performance is crucial before investing.

If you are interested in other stock categories, check out my other lists of the best mid-cap retail, industrial, basic materials, healthcare, tech, semiconductor, energy, financial, utility stocks.