Brenda Vingiello, CIO, Sand Hill Global Advisors iShares Core S&P Mid-Cap ETF IJH-N BUY Jul 26, 2024

Toll Brothers is in here. Mid-caps tend to trade at higher valuations than large-caps, but not today. Trades at 17.5x PE, while the S&P is at 25x PE. Seeing higher earnings growth projections from the mid-cap space, 15.4% for 2025 and 17.6% for 2026. Whereas the S&P is a bit lower at 13.6% and 10%. 

Mid-caps today give you better growth and substantially better valuation. Names include ILMN, TOL, LII, WSM. You want to focus on the names that no one's talking about right now, but will 3 years from now. Falling interest rates also help. Historically, mid-caps tend to be perform better than large- and small-caps 1 year and 3 years out after the first rate cut.

Great way to play the rate-cutting environment, as well as to diversify away from, and complement, the mega-caps in your portfolio.

400 mid-cap names, in the $2-10B USD range. Likes that space, significant valuation (18x PE) discount to the S&P (25x PE). Names include:  ILMN, WSM, TOL, and LII (which he also holds separately). 

Better growth forecast of 14% from mid-caps for 2025, 16% for 2026. Large cap forecast is 13% for 2025, 11% for 2026. Falling interest rate is beneficial for mid-caps. Mid-caps are more domestic, and Trump tax cuts will benefit. Historically when tax cuts start, mid-caps outperform large. MER is 0.05%.

Loves it. Mid-caps are like the favourite child, historically outperforming both large caps and small caps over time. Market-cap weighted. Down 15% YTD. This is the one to buy if you're buying the dip. Consider XMLV.