In the Post-Pandemic Recovery, Mid-Cap Stocks Emerge as Winners
With sales more closely tied to U.S. consumers, they’re outperforming bigger companies.
Rides sit idle at Six Flags Discovery Kingdom in Vallejo, Calif., in April 2020.
Photographer: Justin Sullivan/Getty Images
After global markets plummeted in March 2020, stocks took off on a 15-month rally that pushed many shares to new heights. At first the recovery was led by so-called stay-at-home stocks—companies that benefited from millions of people sitting on the couch all day. More recently, investors have shifted their focus to businesses poised for a rebound in a reopening economy. Midsize companies, it turns out, are key constituents of both groups. The S&P MidCap 400 index has outpaced the S&P 500 by about 35 percentage points since the market bottom.
Why Mid-Caps?
Among the 331 members of the S&P MidCap 400 that break out foreign and domestic sales, 60% of revenue is from the U.S., compared with a little more than half for the much bigger companies that make up the S&P 500. The global reach of larger companies means they haven’t benefited as much from optimism about U.S. economic growth. And they’re more exposed to disruptions in international supply chains and increased antitrust activities in some jurisdictions. Mid-cap companies, with their U.S. focus, have raised their full-year revenue guidance more than at any time since at least 2017.