David Sterman

Pity the poor mid-caps. Many investors tend to focus on large-cap blue-chip stocks, while more aggressive investors often seek out robust potential upside among off-the-radar small-cap stocks. Stuck in the middle: Mid-cap stocks -- which I define as having market values between $1 billion and $5 billion-- often fall into the cracks. And that's a shame because these companies often represent the stability of large caps and the potential for unappreciated value of small caps, as many of them are still not widely-known by most investors.

I went looking for the most interesting mid-cap stocks right now. I focused on companies that exceeded first-quarter profit forecasts by at least 30% (with earnings of at least $0.25 per share). After a deeper look, a few stocks in the group appear especially appealing right now.

Right off the top, we have two stocks that beat the pants off of earnings forecasts. Goodyear Tire (NYSE: GT), which I noted in this article, looks like a deep-value play. The other is Diebold (NYSE: DBD), which my colleague Tim Begany nailed back in January, and thinks is still a buy now.

Is it sustainable?
It's important to remember the old investing maxim "one quarter does not a trend make." Indeed, a company can show real strength in one period, thanks to industry pricing and volume trends, only to see a deep reversal in those factors just three months later.

David Sterman

David Sterman has worked as an investment analyst for nearly two decades. He is currently an analyst for StreetAuthority.com