We recently published a list of 10 Best Mid-Cap Growth Stocks to Buy According to Analysts. In this article, we are going to take a look at where Onto Innovation Inc. (NYSE:ONTO) stands against other best mid-cap growth stocks to buy according to analysts.
Investing in mid-cap growth stocks has long been a favoured strategy for investors looking to strike a balance between the stability of large-cap companies and the high-growth potential of smaller firms. Mid-cap companies, typically defined as those with market capitalizations between $2 billion and $10 billion, occupy that unique space in the market. They are less risky than small-caps, established enough to have proven business models and good access to capital markets, and to top it all, still have ample room for expansion. This combination allows them to swiftly adapt to market changes and capitalize on emerging opportunities.
Many large asset managers have recognized the advantages of mid-cap growth stocks and developed strategies to maximize returns in this segment. Macquarie Asset Management’s equities team highlights that historically, U.S. mid-cap companies have outperformed the broader U.S. market, with mid-cap growth firms delivering even stronger returns compared to a diversified mid-cap universe. Their investment approach focuses on gaining exposure to high-quality mid-cap companies, as they believe these firms not only outperform their lower-quality counterparts but also exhibit greater resilience during market downturns.
Similarly, J.P. Morgan’s Mid-Cap Growth Strategy emphasizes investing in a diversified portfolio of mid-cap companies with above-average growth prospects. The firm prioritizes businesses with leading competitive positions, durable business models, and strong management teams capable of sustaining long-term growth. Their approach reflects the broader market consensus that mid-cap stocks offer an attractive risk-reward profile for investors willing to take a strategic, selective approach.
The strength of mid-cap growth stocks as an investment theme was further reinforced in an October 2024 interview with CNBC, where Eduardo Lecubarri, Managing Director and Global Head of Small and Mid-Cap Equity Strategy at J.P. Morgan, provided insightful commentary on the market environment. He acknowledged the complexity of today’s investment landscape, noting that broader market opportunities remain unclear. However, he emphasized the potential within small- and mid-cap stocks, describing the current moment as a “generational opportunity.” Mr. Lecubarri explained:
“Especially if you are able to buy small-and-mid-cap (SMID) stocks versus large caps, I think the opportunity there is bigger than anything I have ever seen in the last thirty years. It is a generational opportunity, for a lot of reasons. In 2022-23, my recommendation was to stay away from SMID for many reasons (mostly macroeconomic). In November 2023, I changed my view and went overweight. The underperformance was large, valuation is attractive, fundamentals are improving. The story has got a lot more enticing.”
This perspective aligns with the broader sentiment among market experts who see mid-cap stocks as a compelling investment avenue in the medium term. With that in mind, we have curated a list of the 10 best mid-cap growth stocks to buy according to analysts.
Our Methodology
To determine the 10 best mid-cap growth stocks to buy, we conducted a comprehensive screening of U.S.-listed companies operating in growth-oriented industries with a market capitalization between $2 billion and $10 billion. Our selection criteria focused on identifying stocks that have demonstrated strong revenue expansion with sales growth exceeding 20% over the past five years and expected to see continued quarter-over-quarter growth. Additionally, we incorporated a potential upside criterion of over 20%, ensuring that the shortlisted stocks present significant appreciation potential. For the top 10 stocks shortlisted with these criteria, we ranked them in ascending order of potential upside, with those having the highest upside placed at the top of the list. We also added the number of hedge funds which have stakes in these companies, as of Q3 2024.
Note: All pricing data is as of market close on February 11.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician observing a macro defect inspection process, the precision of the company’s systems.
Onto Innovation Inc. (NYSE:ONTO)
Upside Potential: 45%
Number of Hedge Funds: 34
Onto Innovation Inc. (NYSE:ONTO) designs, develops, manufactures, and supports process control, inspection, and metrology tools for the semiconductor industry. Its products are primarily utilized by silicon wafer manufacturers, integrated circuit (IC) fabricators, and advanced packaging manufacturers. Leveraging its extensive technology, the company specializes in creating advanced equipment and software that enhance semiconductor device manufacturing processes.
On February 6, Onto Innovation Inc. (NYSE:ONTO) posted a 21% YoY growth in its Q4 2024 revenue of $264 million driven by advanced nodes and advanced packaging markets. Adjusted operating margin improved 280 basis points YoY to 28.6% which resulted in a robust 43% growth in EPS of $1.51. In mid-January 2025, Cantor Fitzgerald began coverage of Onto Innovation Inc. (NYSE:ONTO) with an Overweight rating and a price target of $250, signifying a potential upside of 42% from the closing price on February 11. Around the same time, an analyst from Needham also listed the stock as a Top Pick in Semi Equipment for 2025, although he marginally reduced the price target to $220. The analyst highlighted concerns about the current semiconductor upcycle’s weakness and a possible downturn in the second half of 2026. Nonetheless, he believes that due to its exposure to TSMC and HBM packaging, and relatively no exposure to China, Onto Innovation Inc. (NYSE:ONTO) is well-positioned to withstand these challenges.
Overall, ONTO ranks 6th on our list of best mid-cap growth stocks to buy according to analysts. While we acknowledge the potential of ONTO to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ONTO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
