Mid-cap shares are often seen as the poor relation in the stock market. They are generally perceived as less compelling than the steady blue chips and not as exciting as the volatile small caps. But consider this: Mid-caps are a hotbed for new and young businesses. After all, today’s mid-caps could be tomorrow’s blue chips. That’s because these exciting companies have the ability to grow their earnings faster than more mature companies. For instance, it is probably easier for a $1 billion mid-cap company to double in value than it is for Singapore Telecommunications (SGX: Z74) to grow from…
But consider this: Mid-caps are a hotbed for new and young businesses. After all, today’s mid-caps could be tomorrow’s blue chips. That’s because these exciting companies have the ability to grow their earnings faster than more mature companies.
For instance, it is probably easier for a $1 billion mid-cap company to double in value than it is for Singapore Telecommunications (SGX: Z74) to grow from S$60 billion to $120 billion. That’s not to say that Singapore’s largest company can’t double in size. But it would be quite a Herculean task.
So it’s not surprising that twice as many mid-sized companies have registered double-digit increases since the start of the year compared to blue chips. Here are the three best performing mid-caps this year.
Ying Li International Real Estate (SGX: 5DM)
Ying Li is a real estate company. It was established in 1993 and it is focussed on developing, selling, renting and managing commercial and residential properties in Chongqing. Its property portfolio includes Zou Rong Plaza in the financial district of Chongqing and New York New York in Bayi Road, where KFC has chosen to situate its Chongqing office. Ying Li also developed upmarket Southland Gardens, which has both commercial and residential use. Shares in Ying Li, which are up 37% this year, largely track its tangible book value. However, in the last couple of years they have been trading at a premium.
GuocoLeisure (SGX: B16)
Shares in GuocoLeisure have jumped by around a third this year from $0.66 to $0.87. The company’s main business is hotels – it owns and operates 39 in the UK under the Guoman banner. These include the Grosvenor in London’s Victoria; the Tower Hotel by London’s Tower Bridge and the Cumberland Hotel near London’s Marble Arch on Oxford Street. The Guoman Hotel in Shanghai is also part of its stable. The company also operates casinos, most notably the Clermont Club, a private members club in Mayfair.
Raffles Medical Group (SGX: R01)
Raffles medical Group has been around since 1976. It runs 74 clinics in Singapore and another four in Hong Kong and China. Apart from taking your pulse and checking your teeth, Raffles also offers insurance and consumer healthcare. Shares in Raffles, which have gained 30% since 1 January, have been on a tear since 2009. Four years’ ago the shares were worth around 50 cents. But today, they cost $3.40, which values the healthcare business at around $1.9 billion. It is easy to see why. Since 2008, revenues have increased by 50% to $311m and profits have grown from $31m to $57m.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.