Are These 3 Midcaps In The Buy Zone Now?
Mid-cap techs Tenable (NASDAQ: TENB), Rapid7 (NASDAQ: RPD), and Qualys (NASDAQ: QLYS) are all forming potentially constructive consolidations below recent price highs.
Mid-cap stocks are an often-overlooked asset class. As the name suggests, mid-caps fall between small- and large-cap stocks. These are often companies that grew in market cap as their price appreciated.
If you currently own predominantly large- or small-cap stocks, mid-caps may be a way of adding some diversification.
A stock is categorized as a mid-cap if the value of its shares is in the range between $2 billion and $10 billion.
Maryland-based Tenable offers cybersecurity services for enterprise customers from industries including automotive, building management, energy, finance, healthcare, medical manufacturing, oil and gas, retail, transportation, water, and government.
The stock gapped up 5.27% Tuesday following the announcement of Tenable.cs, which adds new cloud-native security capabilities to the company’s existing platform.
Tenable’s market capitalization is $5.16 billion. It has 88.1 million shares in float.
It’s currently forming a cup-with-handle base with a buy point above its November 9 high of $56.84. Analysts’ price target remains $62.92, which would mark a 31.01% upside.
MarketBeat analyst data show that institutional inflows totaled $1.51 billion in the past 12 months, ahead of outflows, which totaled $994.71 million.
The consolidation began in January, which is resulting Tenable having a year-to-date loss of 5.38%.
Revenue has been trending higher in the past two years.
With Wall Street expecting 63% earnings growth when this year wraps up, Tenable is a good stock to watch. Ideally, wait to make a buy until the stock can rally above its handle buy point.
Rapid7 is also in the cybersecurity business. This one has been a fast grower recently, advancing 32.04% year-to-date and 54.83% in the past 12 months.
Rapid7 has a market cap of $6.6 billion.
The company focuses on cloud-based software to analyze and provide solutions to threats against customers’ digital, regardless of where the threat emerges.
Rapid7’s rapid growth certainly lives up to the company’s name. Revenue grew at double-digit rates in each of the past eight quarters, with sales accelerating in the past three.
After a loss of $0.10 per share last year, analysts are expecting another loss this year, of $0.07 per share. Next year, analysts see a flip to profitability, with earnings of $0.13 per share.
In the most recent quarter, earnings grew 500% to $0.06 per share.
The stock cleared a third-stage flat base in mid-October, then rallied to a high of $145 on November 4, following Rapid7’s third-quarter report, which topped analysts’ estimates on both the top-and bottom lines.
Since then, the stock pulled back and is down 15.04% in the past month. That’s not an unusually steep correction and is normal to see some excess flushed out following a sustained rally, such as Rapid7 has seen.
Cloud-based compliance and security specialist Qualys is forming a cup-with-handle base with a current buy point above $140.64. The stock successfully tested its 50-day moving average last week, and rallied 4.42% so far this week.
Revenue has grown in the low double digits in the past eight quarters, while earnings grew between 7% and 35% during that time. Its three-year revenue has been trending higher.
California-based Qualys’ revenue comes from subscriptions to its cloud-based platform. The bulk of its revenue originates from U.S. customers.
Qualys has a market cap of $5.16 billion, and has 32.6 million shares in float. The company, which went public in 2012, is up 40.53% in the past year.
Its year-to-date return is 40.53%. That’s despite its current correction which has lasted since February.
Qualys stock is not buyable, but the good news is that a short-term trend line roughly coincides with the cup-with-handle buy point.
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