Are these the best mid cap shares to watch in June 2024?

Mid-capitalisation stocks are companies that trade on the FTSE 250 index. As its name suggests, the FTSE 250 is an index of the top 250 companies by market capitalisation after the FTSE 100.

Mid caps tend to have a market value of at least one to two billion pounds or more. They may have greater growth potential than larger capitalised companies but, as a result, the shares could be more volatile.

The FTSE 100 also undergoes a reshuffle each quarter and famous names once in the top index can find themselves relegated to the FTSE 250 if they have underperformed. Likewise, out-performers in the FTSE 250 can find themselves promoted to the FTSE 100.

Best mid cap shares to watch

Here are some of the mid cap stocks we think may be worth watching in June 2024. These have been chosen for their prospects, valuation and recent market news.

Past performance is not an indicator of future returns.

1. Spire Healthcare
2. Serco
3. EasyJet
4. WH Smith
5. Vistry Group

Spire Healthcare

Spire Healthcare shares have risen by more than 100% over the past five years, driven by increased demand for private access to the company’s 8,000 experienced consultants as NHS waiting times and lists continue to increase.

In FY23 full-year results, Spire saw revenue rise by 13.4% year-over-year to £1,359 million, driven by ‘increasing demand for private healthcare.’ Accordingly, operating profit increased by 32.3% to £126.2 million, ‘delivered in a period of macroeconomic uncertainty and in an inflationary environment.’ And the dividend was increased from 0.5p in FY22 to 2.1p per share in FY23.

98% of Spire’s inspected locations are rated as ‘Good’ or ‘Outstanding’ by regulators across England, Wales and Scotland — and the company spent £84.4 million in the year acquiring a new outpatients and diagnostic centre at Yale, cardiac services at Manchester and Nottingham, and investment into new clinics at Abergele and Harrogate.

CEO Justin Ash enthuses that ‘2024 will be a key year as we continue to transform the business. Through our programme of investments in digital platforms, we will be driving further change and improvement, benefiting patients and colleagues, and generating significant efficiencies. Our new services will become material contributors to our operations and financial results, as we strive to provide a more integrated healthcare offering.’

Serco

Public services provider Serco operates across a vast spectrum of sectors serving governments around the world, across defence, space, healthcare, justice and migration, transport and citizen services.

In full-year results, Serco’s revenue grew by 7% year-over-year to £4.9 billion, while underlying operating profit rose by 5% to £249 million — with more than 60% of these profits derived from outside the UK.

It also noted an order intake of £4.6 billion of wins, with a strong order book of £13.6 billion. And it had a pipeline of £10.1 billion in potential new work, up by 28% in the half year and its highest level in a decade. It’s possible that the company may benefit from the expected Labour-led government, which tends to spend more on public services, with the accompanying hit to the public finances.

CEO Mark Irwin enthuses that ‘We have entered 2024 with increased execution focus on service excellence to our customers, effective conversion of a substantial pipeline of opportunities, the safety and productivity of our colleagues, and progressing the technology-enablement of our business, all aligned to delivery of our medium-term goals.’

Easyjet

Easyjet remains one of the largest and best-known airlines in the world. In half-year results to 31 March 2024, the mid cap airline saw a headline loss before tax of £350 million, thought the company noted that positive summer demand would help deliver strong FY24 earnings growth.

The £61 million year-over-year improvement was driven by 12% capacity growth and flat unit cos excluding fuel. In the second half of 2024, easyJet expects to have circa 59 million seats on sale, an 8% increase year-over-year. This means the company could sell 100 million seats across the entirety of FY24.

The airline also notes that it remains 'on target to deliver our ambitious medium term target of more than £1 billion profit before tax.'

WH Smith

Another company reaping the rewards of the resurgence in travel is retailer WH Smith. Its focus away from the high street and onto travel terminals, such as airports and stations, is paying off.

In interim results to 29 February 2024, the retailer saw total group revenue rise by 8% year-over-year to £926 million, while headline group profit before tax rose by £1 million to £46 million. And the company expects to open a net 110 new shops this year.

CEO Carl Gowling enthuses that 'the Group is in its strongest ever position as a global travel retailer. We have had a good first half and our businesses are well positioned for the peak summer trading period. Total Travel revenue is up 13%. The Board is today announcing an interim dividend of 11.0p reflecting current trading.'

The shares are worth watching, given that they are down 11% this year to 1170p. A price earnings ratio of 24 may be a little pricey but perhaps the valuation is justified.

Vistry Group

Vistry Group (formerly Bovis Homes) places an emphasis on affordable mixed tenure homes, and may also benefit from a Labour government under pressure to get housing costs down, and in particular for first time buyers and social tenants.

In a recent update, the company notified investors that it remains on track to deliver more than 10% growth in completion terms during FY24.

CEO Greg Fitzgerald notes that ‘this is underpinned by our strong forward sales position totalling £4.9bn, up 10% on the same position last year. We remain confident in our differentiated strategy and are making good progress towards our medium-term targets.’

The company appears well positioned, with 95% of its targeted completions on secured development opportunities, and for FY25, 75% of targeted completions on secured development opportunities. The company expects to deliver more than 18,000 completions in FY24, with open market csales at £4.9 billion.

And it also expects to benefit from lower year on year building material costs in FY24 reflecting the engagement with its supply chain throughout 2023. Vistry further noted that it remains ‘confident in achieving a 40% ROCE and £800m operating profit in the medium term. We remain committed to returning £1bn of capital to our shareholders over the next three years.’

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Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

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Top mid cap shares to watch summed up

The above five companies are just a small selection of top stocks to watch among the mid-capitalised companies. Remember that any company can also fail and always do your own research.

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*Based on revenue excluding FX (published financial statements, October 2021).