Are these 3 Mid-cap stocks looking good – BSL, RWC, DOW?

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There are a few options currently in the mid cap section of the market, and buying high quality businesses mostly delivers exciting returns. The mid cap stocks range from a market capitalization between $2 billion to $10 billion and are less risky compared to their small cap counterparts. Here are a few stocks discussed under this category, however, punting at current prices is something that needs to be evaluated.

BlueScope Steel Limited (ASX: BSL) is under metals and mining sector and is a steel producer with footprint in Australia, Asia and North America. BSL stock was trading at a market price of $18.57 (at market open on August 08, 2018) and has seen a daily price change of $ 0.170 and a percentage change of 0.932% a day before. The stock has seen a performance change of 30.2% over the past 12 months and has remained subject to raw material prices. Covering a fifth of all the steelmaker’s Australian electricity purchases, the 7-year contract will have a new 500,000 panel solar farm to be built in the NSW Riverina district by ESCO Pacific. The group has also welcomed US steel exemption. As the costs have gone up to $ 50 million in the past 2 years, the company signed a solar power deal. Currently, the stock is trading at a higher levels.

Reliance Worldwide Corporation Limited (ASX: RWC) is a leading manufacturer of brass Push-to-Connect (PTC) plumbing fittings across the world. The stock has gained traction with sentiments being positive and expected a good response post its successful acquisition of John Guest Holdings Corporation Limited. The acquisition consideration was based on 12.4x purchase price multiple of John Guest’s CY2017 Adjusted EBITDA and the transaction was worth A$1.22 billion. RWC has highlighted that the total synergies would surpass A$20 million EBITDA per annum. Reliance Worldwide was trading at a market price of $5.800 at market open on August 08, 2018, and the stock has seen a performance change of 83.69% over the past 12 months. The group has significant exposure to the offshore currency, US particularly and growth is expected to be witnessed going forward given the acquisition moves. The anticipation is that the Reliance Worldwide might beat market expectations in upcoming earnings result; however, the stock run-up has already taken a level to the 52-week high price and RWC looks touch expensive. While some changes have been made to US import duties, the same might impact FY19 by less than US $1.5 million. However, there will be one-time charge against FY18 EBITDA, which is still expected to stay within the guidance of $150 million to $155 million. The stock was seen to be plunging by 2% with this update of August 08, 2018 during early trading.

Downer EDI Limited (ASX: DOW) is under the industrials sector and provides comprehensive engineering and infrastructure management services to the public and private Minerals & Metals, Oil & Gas, Power, Transport Infrastructure, Communications, Water and Property sectors across Australia, New Zealand and the Asia Pacific region. The stock was trading at a market price of $7.53 as at market open on August 08, 2018, and the stock has seen a performance change of 7.80% over the past 12 months. The stock is trading near its 52-week high and looks expensive. The company has recently, for the provision of mining services at the CSA mine, signed a contract with Cobar Management Pty Limited and this is valued at approximately $120 million. It has also bagged a solar farm contract.

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The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.

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Hina Chowdhary
Hina Chowdhary is the Head of Equities Research at Kalkine and has extensive experience of about 10 years in the area of Research and 4 years in Equities Research particularly. She has earned a Master of Science degree from the renowned Indian Institute of Technology. Hina’s work profile entails in-depth analysis for stocks using a diverse set of financial data tools and models in order to provide appropriate investment opportunities and insights on which stocks to buy, sell or hold. She has hands-on experience in developing industry breaking equity news, company specific investment themes/ ideas, and other equity research related products. She is featured regularly in the Money section of Sydney Morning Herald and The Sun Herald

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