Key points
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Midcap stocks are up about 12% YTD in 2024.
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The top mid cap stock of 2024, GeneDx, has returned more than 2,600%.
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SoundHound AI has returned nearly 800% YTD.
These high-fliers are on the leading edge of innovation.
While large caps and small caps get more attention, mid cap stocks have quietly been the best performers over the long term.
Over the last 25 years dating back to 1999, mid caps have beaten both large and small cap stocks, although large caps have slightly better performance in the 20-year and 10-year windows. Mid cap stocks have also been the best over the past 30 years.
This year, large caps have dominated as the S&P 500 has returned nearly 24%, but mid caps as measured by the S&P 400 have been solid, up 12% as of December 18.
Mid cap stocks, which generally range in market cap from $2 billion to $10 billion, are typically more volatile than large caps, with a wider range of performance. You can certainly see that at the top, as the top 5 mid cap stocks of 2024 posted some huge returns.
GeneDx, up 2,650%
GeneDx (NASDAQ: WGS) is a biopharma stock that specializes in genome and exome testing, diagnostics, and sequencing. It started the year trading at just under $3 per share and right now it is up to around $75 per share, a ridiculous 2,650% increase year-to-date.
GeneDx used to be called Sema4, which acquired GeneDX in 2022. It took the GeneDX name, as the company specialized in the growing field of genome and exome sequencing and diagnostics. GeneDX soon became one of the leaders in the field, particularly in exome sequencing, which helps doctors understand what is causing symptoms or disease in a patient.
GeneDx has sequenced more than 500,000 clinical exomes and has an 80% market share among ordering clinicians. In the most recent quarter, it grew revenue by 77%, reported adjusted gross margins of 64%, and reached profitability for the first time, with adjusted net income of $1.2 million. It also raised its fiscal 2024 revenue guidance.
Given the meteoric rise, investors should be a little wary, at least in the near-term. Recently, some of the executives sold shares. But still, GeneDx looks to have a bright future.
SoundHound AI, up 780%
SoundHound AI (NASDAQ: SOUN) is currently the second best performing stock in the mid cap universe, up around 780% YTD.
SoundHound AI, as the name implies, is an AI stock that specializes in AI voice technology that is used in restaurants, cars, at call centers, and by financial services companies, among other applications. It has exploded in recent months, emerging as one of the leaders in this rapidly growing field.
The company has been rapidly growing along with it, generating an 89% revenue increase in the most recent quarter and raising its revenue guidance for 2025. It now expects $155 million to $175 million in revenue in 2025, which would be 80% higher than 2024.
SoundHound is also unprofitable, but the company expects to achieve adjusted EBITDA profitability in 2025. And like GeneDx, it is a leader in a high-growth industry, so its long-term prospects are tremendous. But it is also extremely overvalued.
NuScale Power, up 475%
NuScale Power (NYSE: SMR) is a company that makes small modular reactors (SMR) that generate nuclear power. The stock has surged some 475% YTD as there has been a resurgence in the use of nuclear power. According to the International Atomic Energy Association, nuclear power has expanded for four years in a row and nuclear capacity is expected to increase by 2.5 times by 2050.
This is because nuclear power is considered clean energy and will be a key part of achieving worldwide net zero greenhouse gas emissions.
Now, NuScale is not a typical nuclear energy provider. It specializes in small modular reactors (SMR), which are cheaper and easier to install. Experts say SMRs are the future of nuclear power and NuScale is the industry leader in SMR and the only U.S. company to receive regulatory approval for an SMR plant. It had to cancel that flagship project because it didn’t have enough subscribers, but it is developing SMRs for several plants around the country.
While NuScale may be the future of nuclear power, it doesn’t have a lot of revenue or earnings in the present, so its stock price gains are mostly speculative based on its potential. But this is one stock to watch every quarter for its incremental growth.
Janux Therapeutics and Core Scientific round out the top five
Janux Therapeutics (NASDAQ: JANX) is the fourth best-performing mid-cap stock so far this year, with shares up 432% to about $58 per share. Janux is a company that develops immunotherapies that seek to attack and kill tumors and generate tumor-specific immune responses.
Core Scientific (NASDAQ: CORZ) is a Bitcoin mining company that recently branched out to develop AI data centers. The stock price has soared since it converted some of its Bitcoin mining facilities to AI data centers, capitalizing on the boom in that space. Core Scientific stock is up about 325% YTD.
Investors should be mindful that mid-cap stocks, especially those of unprofitable companies in developing, high growth industries, can be volatile. Do additional research on these and other stocks before investing.