Dividend-paying large-caps have been in the spotlight lately, as many investors view those equities as a good place to bide time amid market volatility.
However, when it comes to price appreciation, there have been some outstanding performers emerging from the ranks of mid-caps. The S&P 400 mid-cap index doesn't really reflect overall strength -- it has had a month-to-date decline of 2.8% as of Friday -- but some individual mid-cap names are racing ahead of the pack.
Prior to the summer's downturn in the general market, railroad stocks had been price leaders. Since rebounding on Oct. 4, S&P 400 component Kansas City Southern (KSU) has chugged 31% higher.
Revenue growth has accelerated in the past couple of quarters, and earnings, though down from triple-digit growth levels last year, rose 29% or more in the past three quarters.
The stock has a market cap of about $7.3 billion, and it moves 1.3 million shares a day, a decent level of liquidity. Recent upside volume has been good as the stock trended higher, with a couple of weeks of above-average turnover as the price increased.
Kansas City Southern has moved beyond its latest technical buy point, but it could offer another opportunity after its next pullback.
Another mid-cap showing solid price gains with good fundamentals is Panera Bread (PNRA). After the company announced a better-than-expected fourth-quarter outlook, the stock bolted 15.5% on Oct. 26 on more than four times average volume.
The pace of same-store sales has picked up, with company-wide revenue growth accelerating in the past two quarters. Profit growth has been 21% or higher in the past four quarters.
The stock has held its gains since the Oct. 26 leap, and it is currently perched at its 20-day moving average. Volume has come in below average during that time, a good sign as the stock takes a breather, meaning there's not a lot of churn going on that could reflect investor indecision. Recent price and volume action suggests that buyers are satisfied with holding the stock at this price before jumping in with fresh purchases.
Panera's market capitalization is nearly $4 billion, and it moves about 587,000 shares a day. That's thinner trade than you'll see in many of its larger-cap peers.
From the tech sector comes Nuance Communications (NUAN), which is pulling back this month after gaining 9.6% in September and 30.2% in October.
The company's speech-recognition software is used in numerous industries, including medical and automotive.
Nuance has a market cap of nearly $7.4 billion, and it trades more than 4.7 million shares a day, better volume than many companies of similar size.
After those big price moves in the past couple of months, Nuance is forming a new consolidation. Its most recent price correction was bullish, as its August low of $15.56 undercut the trough of the prior base. New intermediate lows often clear the way for new money to swoop in, grabbing shares at bargain prices.
I'll be eyeing this current consolidation closely, to see when the stock begins notching heavy-volume gains again.
Wall Street expects profit growth of 13% for this year, to $1.35 per share. Income is expected to rise another 19% in 2012, to $1.60 a share.
The company reports its fourth quarter on Tuesday, and Wall Street expects profit of $0.42 a share, a year-over-year quarterly gain of 27%. As always, the company's outlook or indications of growth rates and margins could have a big impact on the price, post-earnings, so that's something to keep an eye on.
