10 Best Mid Cap 2b for December 2025
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Market Overview & Selection Criteria
The mid-cap segment presents compelling opportunities for value-oriented investors seeking exposure beyond mega-cap dominance. Our December 2025 stock selection focuses on companies trading near or below intrinsic value estimates, with particular emphasis on free cash flow generation, return on invested capital, and fundamental business quality. These ten stocks represent a cross-section of industrial, healthcare, energy, and consumer sectors, each selected based on ValueSense's proprietary quality ratings, intrinsic valuation models, and financial health metrics. The portfolio balances growth potential with financial stability, offering investors a diversified approach to identifying undervalued equities in the current market environment.
Featured Stock Analysis
Stock #1: Doximity, Inc. (DOCS)
| Metric | Value |
|---|---|
| Market Cap | $9,663.1M |
| Quality Rating | 8.5 |
| Intrinsic Value | $28.9 |
| 1Y Return | -2.9% |
| Revenue | $621.3M |
| Free Cash Flow | $316.2M |
| Revenue Growth | 20.2% |
| FCF margin | 50.9% |
| Gross margin | 90.2% |
| ROIC | 80.3% |
| Total Debt to Equity | 1.0% |
Investment Thesis
Doximity stands out as the highest-quality company in this selection, commanding a ValueSense quality rating of 8.5—significantly above the peer average. The healthcare technology platform demonstrates exceptional operational efficiency with a 50.9% free cash flow margin and an outstanding 80.3% return on invested capital, indicating superior capital deployment and business model strength. Trading at an intrinsic value of $28.9, the stock offers investors exposure to the digital healthcare infrastructure trend with a company that has proven its ability to convert revenue into cash returns. The platform's 20.2% revenue growth rate reflects sustained demand for its physician networking and professional services solutions, positioning DOCS as a quality-at-a-reasonable-price opportunity within the healthcare technology sector.
Key Catalysts
- Continued expansion of digital healthcare adoption among medical professionals
- Potential margin expansion as the platform scales
- Strategic partnerships or integrations with healthcare systems
- International expansion opportunities in telehealth infrastructure
Risk Factors
- Regulatory changes affecting healthcare data privacy and sharing
- Competition from larger healthcare IT platforms
- Dependence on physician adoption and engagement metrics
- Market saturation risks in core U.S. physician network
Stock #2: Applied Industrial Technologies, Inc. (AIT)
| Metric | Value |
|---|---|
| Market Cap | $9,791.1M |
| Quality Rating | 6.9 |
| Intrinsic Value | $192.1 |
| 1Y Return | -5.6% |
| Revenue | $4,664.0M |
| Free Cash Flow | $455.0M |
| Revenue Growth | 4.0% |
| FCF margin | 9.8% |
| Gross margin | 30.4% |
| ROIC | 17.1% |
| Total Debt to Equity | 30.4% |
Investment Thesis
Applied Industrial Technologies represents a compelling value opportunity in the industrial distribution sector with a quality rating of 6.9 and an intrinsic value of $192.1. The company demonstrates solid operational performance with a 17.1% return on invested capital and a healthy 9.8% free cash flow margin, suggesting efficient working capital management and strong cash generation capabilities. Despite a modest 4.0% revenue growth rate, AIT's ability to maintain profitability and generate consistent free cash flow of $455.0 million from $4.7 billion in revenue indicates a mature, cash-generative business model. The company's 30.4% gross margin provides pricing power and operational flexibility, making it an attractive holding for income-focused and value-oriented investors seeking exposure to industrial infrastructure trends.
Key Catalysts
- Industrial sector recovery and increased capital expenditure cycles
- Margin expansion through operational efficiency initiatives
- Strategic acquisitions in complementary distribution channels
- Digital transformation of supply chain operations
Risk Factors
- Economic sensitivity to manufacturing and industrial production cycles
- Competitive pressure from larger industrial distributors
- Supply chain disruption impacts on inventory management
- Debt levels at 30.4% debt-to-equity ratio requiring monitoring
Stock #3: Regal Rexnord Corporation (RRX)
| Metric | Value |
|---|---|
| Market Cap | $9,737.2M |
| Quality Rating | 6.0 |
| Intrinsic Value | $189.0 |
| 1Y Return | -15.3% |
| Revenue | $5,872.3M |
| Free Cash Flow | $936.4M |
| Revenue Growth | (5.0%) |
| FCF margin | 15.9% |
| Gross margin | 37.0% |
| ROIC | 4.8% |
| Total Debt to Equity | 72.8% |
Investment Thesis
Regal Rexnord offers exposure to the industrial machinery and motion control sector with a quality rating of 6.0 and an intrinsic value of $189.0. The company generates substantial free cash flow of $936.4 million with a 15.9% FCF margin, demonstrating strong cash conversion despite a challenging revenue environment. The 37.0% gross margin reflects the company's premium positioning in engineered motion control solutions, serving diverse end markets including industrial automation, aerospace, and renewable energy. While the company faces near-term revenue headwinds with a 5.0% decline, the robust free cash flow generation and solid return on invested capital of 4.8% suggest underlying business resilience and potential for recovery as industrial demand normalizes.
Key Catalysts
- Recovery in industrial production and capital equipment demand
- Renewable energy transition driving demand for motion control solutions
- Operational efficiency improvements and cost restructuring benefits
- Potential strategic partnerships in electrification and automation
Risk Factors
- Elevated debt-to-equity ratio of 72.8% limiting financial flexibility
- Cyclical exposure to industrial production and capital spending
- Current revenue contraction indicating near-term headwinds
- Integration risks from previous acquisitions
Stock #4: HF Sinclair Corporation (DINO)
| Metric | Value |
|---|---|
| Market Cap | $9,906.8M |
| Quality Rating | 6.4 |
| Intrinsic Value | $63.4 |
| 1Y Return | 31.4% |
| Revenue | $26.9B |
| Free Cash Flow | $917.5M |
| Revenue Growth | (9.5%) |
| FCF margin | 3.4% |
| Gross margin | 9.8% |
| ROIC | 5.9% |
| Total Debt to Equity | 4.1% |
Investment Thesis
HF Sinclair presents an attractive energy sector opportunity with a quality rating of 6.4 and an intrinsic value of $63.4, supported by strong recent performance with a 31.4% one-year return. The refining company generates $917.5 million in free cash flow from $26.9 billion in revenue, demonstrating the cash-generative nature of downstream energy operations. With a conservative 4.1% debt-to-equity ratio and a 5.9% return on invested capital, DINO maintains financial flexibility while navigating commodity price cycles. The 9.8% gross margin reflects typical refining economics, while the company's scale and operational efficiency position it to benefit from energy market dynamics and potential margin expansion in favorable crude oil and product price environments.
Key Catalysts
- Geopolitical developments affecting crude oil supply and pricing
- Refining margin expansion from supply-demand imbalances
- Strategic investments in renewable fuels and low-carbon initiatives
- Potential shareholder returns through dividends or buybacks
Risk Factors
- Commodity price volatility affecting refining margins
- Regulatory pressures on carbon emissions and energy transition
- Geopolitical risks to crude oil supply chains
- Demand uncertainty from transportation electrification trends
Stock #5: GameStop Corp. (GME)
| Metric | Value |
|---|---|
| Market Cap | $10.1B |
| Quality Rating | 6.3 |
| Intrinsic Value | $15.1 |
| 1Y Return | -22.4% |
| Revenue | $3,847.5M |
| Free Cash Flow | $481.7M |
| Revenue Growth | (15.5%) |
| FCF margin | 12.5% |
| Gross margin | 30.1% |
| ROIC | 16.7% |
| Total Debt to Equity | 85.3% |
Investment Thesis
GameStop represents a turnaround story with a quality rating of 6.3 and an intrinsic value of $15.1, offering a speculative opportunity for investors believing in the company's transformation narrative. Despite a challenging 22.4% one-year decline, the company maintains a 16.7% return on invested capital and a 12.5% free cash flow margin, indicating operational improvements in its core business. The $481.7 million in free cash flow generation from $3.8 billion in revenue demonstrates the company's ability to generate cash despite secular headwinds in physical game retail. The 30.1% gross margin provides a foundation for profitability, while management's strategic initiatives and capital allocation decisions will be critical to determining whether the company can successfully navigate the shift toward digital gaming and e-commerce.
Key Catalysts
- Successful execution of e-commerce and digital strategy transformation
- Potential expansion into adjacent consumer electronics categories
- Management initiatives to improve operational efficiency
- Market sentiment shifts regarding retail gaming and collectibles
Risk Factors
- Ongoing secular decline in physical game retail sales
- Elevated debt-to-equity ratio of 85.3% limiting strategic flexibility
- Intense competition from digital distribution platforms
- Execution risk on turnaround strategy and capital allocation
Stock #6: Paramount Global (PARA)
| Metric | Value |
|---|---|
| Market Cap | $9,760.5M |
| Quality Rating | 5.2 |
| Intrinsic Value | $55.3 |
| 1Y Return | 40.1% |
| Revenue | $28.8B |
| Free Cash Flow | $507.0M |
| Revenue Growth | (1.8%) |
| FCF margin | 1.8% |
| Gross margin | 31.8% |
| ROIC | 5.7% |
| Total Debt to Equity | 90.6% |
Investment Thesis
Paramount Global offers a media and entertainment opportunity with a quality rating of 5.2 and an intrinsic value of $55.3, supported by impressive 40.1% one-year returns reflecting market optimism about the company's streaming and content strategy. The company generates $507.0 million in free cash flow from $28.8 billion in revenue, though the 1.8% FCF margin indicates tight operational efficiency. The 31.8% gross margin reflects the content production economics of the media business, while the company's diversified revenue streams across traditional broadcasting, streaming, and theatrical distribution provide multiple growth vectors. The elevated 90.6% debt-to-equity ratio reflects the capital intensity of content production and streaming investments, requiring careful monitoring of leverage trends.
Key Catalysts
- Streaming subscriber growth and profitability inflection
- Content hit performance driving engagement and retention
- Advertising market recovery supporting traditional media revenues
- Potential strategic partnerships or consolidation in media sector
Risk Factors
- Cord-cutting and traditional media viewership decline
- Intense competition in streaming from larger platforms
- High debt levels constraining financial flexibility
- Content production cost inflation and talent compensation pressures
Stock #7: Aramark (ARMK)
| Metric | Value |
|---|---|
| Market Cap | $9,739.4M |
| Quality Rating | 5.8 |
| Intrinsic Value | $72.0 |
| 1Y Return | -8.2% |
| Revenue | $18.5B |
| Free Cash Flow | $574.3M |
| Revenue Growth | 6.4% |
| FCF margin | 3.1% |
| Gross margin | 7.7% |
| ROIC | 6.5% |
| Total Debt to Equity | 19.2% |
Investment Thesis
Aramark presents a food services and facilities management opportunity with a quality rating of 5.8 and an intrinsic value of $72.0. The company generates $574.3 million in free cash flow from $18.5 billion in revenue, with a 3.1% FCF margin reflecting the operational leverage in large-scale contract services. The 6.4% revenue growth rate indicates recovery momentum in post-pandemic demand for corporate dining, education, and healthcare food services. The 7.7% gross margin is typical for contract food service operations, while the company's diversified customer base across corporate, education, and healthcare sectors provides revenue stability. The 6.5% return on invested capital suggests reasonable capital efficiency in a capital-light service business model.
Key Catalysts
- Continued recovery in corporate dining and workplace utilization
- Margin expansion from operational efficiency and pricing power
- Growth in healthcare and education food service contracts
- Sustainability initiatives driving premium service offerings
Risk Factors
- Labor cost inflation affecting service delivery margins
- Economic sensitivity to corporate spending and workplace trends
- Competition from regional and specialized food service providers
- Commodity food cost volatility impacting margins
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Stock #8: MGM Resorts International (MGM)
| Metric | Value |
|---|---|
| Market Cap | $9,651.2M |
| Quality Rating | 5.7 |
| Intrinsic Value | $41.9 |
| 1Y Return | -8.0% |
| Revenue | $17.3B |
| Free Cash Flow | $1,369.4M |
| Revenue Growth | 0.1% |
| FCF margin | 7.9% |
| Gross margin | 34.0% |
| ROIC | 2.5% |
| Total Debt to Equity | 1,011.0% |
Investment Thesis
MGM Resorts offers exposure to the hospitality and gaming sector with a quality rating of 5.7 and an intrinsic value of $41.9, despite an 8.0% one-year decline. The company generates substantial free cash flow of $1.37 billion from $17.3 billion in revenue, with a 7.9% FCF margin demonstrating the cash-generative nature of casino and resort operations. The 34.0% gross margin reflects the high-margin gaming and entertainment revenue streams, while the company's portfolio of iconic properties provides brand value and customer loyalty. However, the extremely elevated 1,011.0% debt-to-equity ratio represents a significant financial risk requiring careful consideration, reflecting the capital-intensive nature of casino resort operations and substantial leverage from previous acquisitions and refinancings.
Key Catalysts
- Recovery in Las Vegas tourism and convention business
- International expansion opportunities in gaming markets
- Sports betting and digital gaming revenue growth
- Potential debt refinancing and leverage reduction initiatives
Risk Factors
- Extreme leverage limiting financial flexibility and increasing bankruptcy risk
- Economic sensitivity to consumer discretionary spending
- Competition from regional casinos and online gaming platforms
- Regulatory risks in gaming and sports betting markets
Stock #9: The AES Corporation (AES)
| Metric | Value |
|---|---|
| Market Cap | $10.0B |
| Quality Rating | 5.0 |
| Intrinsic Value | $27.4 |
| 1Y Return | 9.5% |
| Revenue | $12.1B |
| Free Cash Flow | ($2,215.0M) |
| Revenue Growth | (1.5%) |
| FCF margin | (18.3%) |
| Gross margin | 38.0% |
| ROIC | 1.8% |
| Total Debt to Equity | 293.0% |
Investment Thesis
The AES Corporation represents a utility and renewable energy opportunity with a quality rating of 5.0 and an intrinsic value of $27.4, supported by a 9.5% one-year return. The company generates $12.1 billion in revenue but faces significant cash flow challenges with negative $2.2 billion free cash flow and an 18.3% negative FCF margin, indicating capital-intensive operations and investment cycles. The 38.0% gross margin reflects utility economics, while the 1.8% return on invested capital suggests challenges in capital efficiency. The extremely elevated 293.0% debt-to-equity ratio represents substantial financial leverage, typical for utility companies but requiring careful monitoring. AES's exposure to renewable energy transition trends provides long-term growth potential, though near-term cash flow dynamics warrant cautious evaluation.
Key Catalysts
- Renewable energy capacity expansion and grid modernization investments
- Regulatory support for clean energy infrastructure
- Potential dividend growth as capital investment cycles normalize
- International market expansion in emerging economies
Risk Factors
- Negative free cash flow and capital intensity of business model
- Extreme leverage limiting financial flexibility
- Regulatory and political risks in international markets
- Interest rate sensitivity affecting utility financing costs
Stock #10: Moderna, Inc. (MRNA)
| Metric | Value |
|---|---|
| Market Cap | $9,940.4M |
| Quality Rating | 6.0 |
| Intrinsic Value | $37.6 |
| 1Y Return | -39.7% |
| Revenue | $2,231.0M |
| Free Cash Flow | ($2,653.0M) |
| Revenue Growth | (56.0%) |
| FCF margin | (118.9%) |
| Gross margin | 48.2% |
| ROIC | (91.2%) |
| Total Debt to Equity | 7.4% |
Investment Thesis
Moderna presents a biotechnology opportunity with a quality rating of 6.0 and an intrinsic value of $37.6, though the company faces significant operational challenges reflected in a 39.7% one-year decline. The company generates $2.2 billion in revenue but faces substantial cash flow headwinds with negative $2.7 billion free cash flow and a negative 118.9% FCF margin, indicating significant research and development investments and operational losses. The 48.2% gross margin reflects pharmaceutical economics, while the negative 91.2% return on invested capital indicates the company is currently destroying shareholder value on a capital basis. The low 7.4% debt-to-equity ratio provides financial flexibility, but the company's ability to achieve profitability and positive cash flow generation remains uncertain as COVID-19 vaccine revenues normalize.
Key Catalysts
- Successful development and commercialization of new mRNA vaccines and therapeutics
- Potential partnerships or licensing agreements for mRNA technology
- Regulatory approvals for pipeline candidates in oncology and infectious disease
- Achievement of profitability and positive free cash flow
Risk Factors
- Severe cash flow burn and path to profitability uncertainty
- Declining COVID-19 vaccine revenues affecting top-line growth
- Competitive pressure from other vaccine and mRNA technology developers
- Execution risk on pipeline development and commercialization
Portfolio Diversification Insights
This ten-stock portfolio provides meaningful diversification across multiple dimensions. Sector allocation spans healthcare technology (Doximity), industrial distribution (Applied Industrial Technologies, Regal Rexnord), energy (HF Sinclair), retail (GameStop), media (Paramount), food services (Aramark), hospitality (MGM Resorts), utilities (AES), and biotechnology (Moderna). Quality stratification ranges from Doximity's exceptional 8.5 rating to Moderna and AES at the lower end, allowing investors to balance quality exposure with value opportunities. Cash flow characteristics vary significantly, from Doximity's 50.9% FCF margin to Moderna's negative 118.9% margin, providing exposure to both mature cash-generative businesses and growth-stage companies with significant capital requirements.
Financial leverage presents another diversification dimension, with conservative companies like HF Sinclair (4.1% debt-to-equity) contrasting sharply with highly leveraged entities like MGM Resorts 1,011.0% and AES 293.0%. This variation allows investors to calibrate their risk exposure based on financial stability preferences. Growth profiles range from Doximity's 20.2% revenue growth to companies facing revenue declines, providing exposure to both expansion and value recovery narratives. The portfolio balances defensive characteristics (utilities, food services) with cyclical exposure (energy, hospitality, industrial) and growth potential (healthcare technology, biotech), creating a multi-faceted investment approach suitable for various market environments.
Market Timing & Entry Strategies
Dollar-cost averaging represents a prudent approach for building positions in this portfolio, particularly given the diverse quality ratings and risk profiles. Rather than deploying capital in a single transaction, investors might consider establishing positions over multiple months, allowing for price averaging and reduced timing risk. Sector rotation opportunities exist based on macroeconomic conditions—favoring industrial and energy stocks during economic expansion phases while rotating toward utilities and healthcare during contraction periods. Valuation-based entry points should consider each stock's intrinsic value relative to current market price, with wider discounts potentially justifying larger position sizes for quality companies like Doximity.
Technical support levels and earnings announcement dates provide tactical entry opportunities, allowing investors to establish positions at more favorable prices. Momentum considerations suggest that stocks with positive recent performance (Paramount, HF Sinclair) may face near-term consolidation, potentially offering better entry points than stocks in downtrends. Fundamental catalysts specific to each company—such as earnings releases, regulatory decisions, or strategic announcements—should inform timing decisions. Investors should establish clear entry criteria and position sizing rules before deploying capital, ensuring disciplined execution aligned with their overall portfolio strategy and risk management framework.
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FAQ Section
Q1: How were these stocks selected for this portfolio?
These ten stocks were selected based on ValueSense's proprietary quality ratings, intrinsic valuation models, and fundamental financial metrics. The selection process emphasizes companies trading near or below calculated intrinsic values, with consideration for free cash flow generation, return on invested capital, and business model sustainability. The portfolio intentionally includes a range of quality ratings and financial profiles to provide diversification across different investment styles and risk tolerances.
Q2: Which stock from this list offers the best risk-adjusted opportunity?
Doximity (DOCS) presents the most compelling risk-adjusted opportunity, combining the highest quality rating 8.5 with exceptional cash flow metrics (50.9% FCF margin) and strong revenue growth 20.2%. The company's low debt-to-equity ratio 1.0% and 80.3% return on invested capital indicate a business model with sustainable competitive advantages and efficient capital deployment. For investors prioritizing quality and financial stability, DOCS represents the most attractive entry point in this portfolio.
Q3: Should I invest in all these stocks or focus on a subset?
Portfolio construction depends on individual investment objectives, risk tolerance, and time horizon. Conservative investors might focus on quality companies like Doximity and Applied Industrial Technologies, which combine reasonable valuations with strong operational metrics. Value-oriented investors might emphasize higher-risk opportunities like Moderna and AES, which trade at significant discounts but face execution challenges. A balanced approach might involve allocating 40% to quality companies, 40% to established value opportunities, and 20% to higher-risk turnaround situations, adjusting allocations based on personal preferences.
Q4: What are the biggest risks with these stock picks?
The portfolio faces multiple risk categories: leverage risks from MGM Resorts' extreme 1,011.0% debt-to-equity ratio and AES's 293.0% leverage; cash flow risks from Moderna's negative $2.7 billion free cash flow and AES's negative $2.2 billion FCF; cyclical exposure from energy, hospitality, and industrial stocks vulnerable to economic downturns; and execution risks from turnaround situations like GameStop and Paramount requiring successful strategic transformations. Investors should carefully evaluate their risk tolerance and position sizing accordingly.
Q5: When is the best time to invest in these stocks?
Optimal timing depends on individual circumstances and market conditions. For quality companies like Doximity, dollar-cost averaging over 3-6 months reduces timing risk while building meaningful positions. For cyclical stocks like HF Sinclair and industrial companies, consider accumulating during economic slowdowns when valuations compress. For turnaround situations like GameStop and Moderna, establish smaller initial positions and add on positive catalysts and improving fundamentals. For leveraged companies like MGM and AES, monitor debt refinancing activities and interest rate environments before committing capital. Investors should establish clear entry criteria and avoid attempting to time market bottoms perfectly.