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Mid caps stand out since they offer better earnings than large caps and are safer than small caps.
If the US economy continues to grow as Goldman Sachs expects, the group should rise.
Here are 25 high-quality, mid-cap stocks that are trading at fair valuations right now.
Midsize stocks are an investment straight out of the "Goldilocks and the Three Bears story," and Goldman Sachs believes they're destined for a fairy-tale ending.
The group has a much more promising earnings outlook than large caps, better balance sheets than small caps, and cheap valuations relative to both large caps and small caps on a forward basis, Goldman Sachs strategists headlined by Jenny Ma wrote in a recent note.
"Investors can buy growth and quality at a discounted price with mid caps," Ma wrote.
Goldman Sachs
Perhaps even more encouraging is that history is on mid caps' side, especially when the Federal Reserve cuts interest rates. The mid-cap-focused S&P 400 has significantly outpaced its large and small-cap counterparts in the last four decades, including in the immediate aftermath of rate cuts. It's a foregone conclusion that the Fed will cut at least once next week.
Goldman Sachs
Those factors should help the S&P 400 rise 13% in the next 12 months, Goldman Sachs says, assuming the US economy keeps growing. Mid-cap returns are best when growth accelerates, but they've been positive as long as there's an expansion in place. Goldman is confident that will remain the case, even though there have been jitters about the economy lately.
"A deterioration in the economic growth backdrop is the key risk for mid-cap equities, but downside risks should be cushioned by lower valuations relative to large-caps and stronger fundamentals relative to small caps," Ma wrote.
25 quality stocks trading at fair prices
Amid the economic uncertainty that has defined the last few years in markets, many investors have sought familiarity and stability in popular mega-cap technology stocks.
This flight to quality companies with robust balance sheets and impressive earnings growth has pushed their valuations to ambitious levels, while making many mid- and small-caps look cheap. Goldman Sachs suspects that a reversal is coming as mid-cap earnings top those of large caps.
Goldman Sachs
"The extreme level of S&P 500 market concentration and concerns over the return on AI investments have prompted investors to search for opportunities beyond the largest stocks," Ma wrote.
And while small caps should post even higher earnings growth next year, that cohort is filled with unprofitable companies, Ma noted. Mid caps are generally more financially healthy, plus their earnings growth should be superior in 2026 — making them a safer bet going forward.
Goldman Sachs
"Quality stocks will likely continue to outperform in both our baseline macro environment and in the event of a recession," Ma wrote. "Low-quality segments of the market, such as small caps, will likely remain pressured at these levels due to weak balance sheets and low profitability."
Below are 25 mid-cap stocks in the S&P 400 that Goldman Sachs spotlighted due to their solid balance sheets, double-digit expected earnings growth for 2025, above-average sales growth, and cheap valuations based on their forward earnings multiple versus their five-year median.
Each is accompanied by its ticker, market capitalization, price-to-earnings (P/E) ratio, sector, industry, and projected earnings and sales growth in 2025.
