Wall Street has been on an incredible run since the March 2020 market correction. And the stock markets have gotten even more bullish since President Biden assumed office  last week. But while the biggest players dominated the market last year, relatively smaller players with high growth potential have remained relatively unnoticed by many investors.

Global economic activity began rebounding last quarter, and the trend is expected to continue with the COVID-19 vaccine gradually limiting the spread of the virus. Mid-cap stocks typically outperform large caps during periods of accelerating economic growth. Moreover, because most of the biggest companies grew exponentially last year, we think it  could be wise now to bet on the shares of relatively smaller companies that still have plenty of room for growth.

O’Reilly Automotive, Inc. (ORLY), Proofpoint, Inc. (PFPT), Crocs, Inc. (CROX) and CMC Materials, Inc. (CCMP) are four top-rated, mid-cap picks that are well-positioned to gain this year based on their sound business models and compelling growth parameters.

O’Reilly Automotive, Inc. (ORLY)

ORLY is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the U.S., serving both the do-it-yourself and professional service provider markets. As of September 30, 2020, the company operated 5,592 stores in 47 U.S. states and 21 stores in Mexico.

ORLY has been on an expansion spree lately. The company has consistently added new stores in the past few years. Despite the pandemic’s disruption, ORLY added 153 locations in the first nine months of 2020. Management believes the company will end the year with 165 new stores. The company is scheduled to release its fourth quarter and full-year 2020 results on February 10.

ORLY’s revenue and EPS grew at a CAGR of 8.2% and 24%, respectively, over the past three  years. In the third quarter, its sales increased $541 million, or 20% year-over-year, to $3.21 billion. In addition,  comparable store sales for the quarter surged 16.9% compared to the prior year. Net cash provided by operating activities increased 57.7% year-over-year. And its EPS for the quarter came in at $7.07, rising 39% year-over-year.

ORLY has gained 16.9% over the past month. It is witnessing encouraging progress in demand from do-it-yourself customers that are using stimulus aid to fix up their cars. The company’s do-it-for-me (DIFM) segment advanced also and has surpassed management’s expectations, driven primarily by the work-from-home trend. While the remote culture is here to stay, in line with the progress, analysts expect ORLY’s full-year 2020 revenue and EPS to grow 13.7% and 29.7%, respectively.

How does ORLY stack up for the POWR Ratings?

A for Trade Grade

B for Buy & Hold Grade

B for Industry Rank

B for Overall POWR Rating.

It is ranked #25 of 68 stocks in the Auto Parts industry.

Proofpoint, Inc. (PFPT)

PFPT is a leading cybersecurity company that operates as a security-as-a-service provider and enables large and mid-sized organizations to defend, protect, archive, and govern their sensitive data worldwide. The company offers cloud-based solutions for comprehensive threat protection, incident response, secure communications, social media security, compliance, archiving and governance.

In October, PFPT announced Content Capture for Microsoft Teams, its latest compliance solution designed for global, regulated organizations. The Capture platform aims to provide an effective way for employees to communicate while ensuring digital communications compliance. In fact, PFPT was named the winner of the “Overall Enterprise Email Security Solution Provider of the Year” award in the CyberSecurity Breakthrough Awards program held in November.

Over the past three years, PFPT has grown its top line at a CAGR of 28.5%. The company will report financial results for the fourth quarter and full year 2020 on February 4, 2021. In the third quarter ended September 30, , PFPT’s reported revenue of $226.7 million, soaring 17% year-over-year. Its total billings increased 6% year-over-year to $294.4 million. And its non-GAAP EPS came in at $0.59, rising 20.4% compared to the year-ago value of $0.49.

PFPT is up 26.8% over the past three months. A favorable competitive environment and strong secular tailwinds are fueling PFPT’s growth. Major corporations have permanently adopted a virtual work culture and are shedding outdated systems and accelerating their move to modern cloud-native technologies to meet the demands of today’s cyber threat landscape.

Analysts expect the company’s current  year revenue and EPS to grow 14.1% and 7.9%, respectively.

It is no surprise that PFPT is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and a “B” for Peer Grade. It is ranked #6 of 25 stocks in the Software – Security industry.

Crocs, Inc. (CROX)

CROX is a world leader in innovative casual footwear for men, women and children. Crocs offers a broad portfolio of all-season products, while remaining true to its core molded footwear heritage. The company sells its products in more than 90 countries globally through wholesalers and distributors, as well as through stores and e-commerce sites. As of September 2020, CROX operated 351 retail stores, including  nearly 186 outlet stores.

CROX’s focus on comfort and style, coupled with branding partnerships with companies ranging from restaurant chains to fashion labels to pop stars, has helped turn its products into a fashion statement. They  also become a favorite of healthcare workers; Crocs donated 10,000 pairs of shoes a day to healthcare professionals at the start of the pandemic.

The company’s revenue has grown at a CAGR of 6.9% over the past three  years. CROX reported impressive third quarter results with record revenue growth. Total net revenue increased 15.9% year-over-year to $361.7 million, with growth in all three channels. Digital sales grew 35.5% to represent 37.7% of revenue, while retail comparable store sales grew 16.2% year-over-year. EPS came in at record $0.91, rising 78.4% compared to the year-ago value.

CROX has been making significant progress in expanding digital and omni-channel capabilities. In fact, the previous year turned out to be one of the best years for the company. It witnessed heightened demand for its products during the pandemic. As a result, CROX has recently raised its earnings outlook. The company expects its fourth-quarter revenues to surge approximately 55% to  between $407 and $410 million, while its full-year 2020 revenues are expected to  rise more than 12%, up from recent guidance of approximately 5% to 7% growth. Management further expects accelerated revenue growth of 20% to 25% this year.

CROX’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade and Peer Grade, and a “B” for Industry Rank. Among the 70 stocks in the Fashion & Luxury industry, it is ranked #6.

CMC Materials, Inc. (CCMP)

CCMP is a global supplier of consumable materials to semiconductor manufacturers and pipeline companies. The company works primarily  in the initial stages of nanotechnology and is a leader in developing chemical mechanical planarization (CMP). The company operates through two segments – Electronic Materials and Performance Materials.

CCMP recently announced a name change and rebranding–from Cabot Microelectronics Corporation to CMC Materials, Inc.–which includes a new visual identity. Over the past three years, CCMP has grown its top-line and EPS at a CAGR of 30.1% and 12.4%, respectively, as nanotechnology has witnessed  ever-increasing demand from a wide range of industries, including life sciences, textile, food, electronics, energy, and the environment.

CCMP will hold an  earnings webcast on February 3 to discuss the financial results of its fiscal first quarter ended December 31, 2020. In its fiscal fourth quarter ended September 30, 2020, its  was $87.5 million, declining 1.6% year-over-year as stronger demand in CMP slurries and electronic chemicals and  higher wood treatment revenue were offset by lower revenue in pipeline performance products and CMP pads. However, its adjusted EPS for the quarter was  $1.96, rising 16% over  the year-ago value.

CCMP’s management expects to see continued strong demand from its semiconductor customers driven by advanced node transitions to support new technologies including 5G, as well as improving fundamentals and demand from its pipeline customers. The stock is up 14.9% in the past month and should gain more  momentum because analysts expect CCMP’s current year revenue to grow 3.4%, year-over-year.

CCMP’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade and Industry Rank. It is ranked #37 of 99 stocks in the Semiconductor & Wireless Chip industry.

More Great Investing Ideas?

9 “MUST OWN” Growth Stocks for 2021

How to Outperform the Stock Market?

7 Best ETFs for the NEXT Bull Market

5 WINNING Stocks Chart Patterns

ORLY shares were trading at $454.50 per share on Tuesday afternoon, up $4.55 (+1.01%). Year-to-date, ORLY has gained 0.43%, versus a 2.65% rise in the benchmark S&P 500 index during the same period.

About the Author: Sidharath Gupta

Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...

More Resources for the Stocks in this Article