Mid-Cap Stock to Buy: Tradeweb Markets (TW), Mid-Cap Stocks to Avoid: Expedia (EXPE) and Huntington Ingalls (HII)

This article highlights three mid-cap stocks with different prospects. Expedia (EXPE) is considered a stock to sell due to its focus on platform expansion at the expense of monetization, slow demand growth, and high marketing spend. Huntington Ingalls (HII) is also considered a sell due to weak backlog growth, flat earnings despite revenue growth, and diminishing returns on capital. On the other hand, Tradeweb Markets (TW) is considered a buy due to its impressive 25.9% annual revenue growth and highly profitable incremental sales over the last two years.

Mid-cap stocks often represent a sweet spot between established business models and market opportunities. However, they face intense competition from industry giants and innovative upstarts. This article evaluates three mid-cap stocks with differing prospects: Expedia (EXPE), Huntington Ingalls (HII), and Tradeweb Markets (TW).

Expedia (EXPE)
Expedia, originally part of Microsoft, is one of the world's leading online travel agencies. However, several factors give investors pause. The company's focus on platform expansion has come at the expense of monetization, as its average revenue per booking fell by 1.5% annually. Estimated sales growth of 5.3% for the next 12 months indicates a slowing demand trend compared to its three-year average. Furthermore, the highly competitive market means ongoing sales and marketing spend. At $216.18 per share, EXPE trades at an 8.6x forward EV/EBITDA ratio, making it a potential sell [1].

Huntington Ingalls (HII)
Huntington Ingalls, a developer of marine vessels and their mission systems and maintenance services, has shown weak backlog growth, averaging 4% over the past two years. This suggests a need to adjust its product roadmap or go-to-market strategy. Despite incremental sales over the last five years, earnings per share remained flat while revenue grew. Diminishing returns on capital indicate that earlier profit pools are drying up. At $270.79 per share, HII trades at a 17.8x forward P/E ratio, making it another potential sell [1].

Tradeweb Markets (TW)
Tradeweb Markets, a pioneer in electronic bond trading, has shown impressive performance. With 25.9% annual revenue growth over the last two years, it has been winning market share. Incremental sales over the past two years were highly profitable, with earnings per share increasing by 27.5% annually, outpacing revenue growth. At $123.36 per share, TW trades at a 34.1x forward P/E ratio, making it a potential buy [2].

Conclusion
These mid-cap stocks offer diverse investment opportunities. While Expedia and Huntington Ingalls face challenges in monetization and growth, Tradeweb Markets presents a compelling growth story. Investors should evaluate these companies based on their specific financial health and market prospects.

References
[1] https://finance.yahoo.com/news/2-mid-cap-stocks-watchlist-043209020.html
[2] https://stockstory.org/us/stocks/nasdaq/expe/news/buy-or-sell/1-mid-cap-stock-worth-your-attention-and-2-we-find-risky