Investors seem to be warming back up to U.S. stocks, with good reason: despite growing nervousness about a global economic slowdown, our economic indicators continue to look relatively strong — confirming the view of many economists, and the Federal Reserve Board, that the fourth-quarter slowdown did not presage a U.S. recession.

When jobs and consumer spending are on the rise while interest rates and inflation remain low, it’s time to look beyond the safer, high-quality stocks that looked attractive after the correction and focus on slightly more leveraged plays on the economy: mid-cap growth stocks. Midsized companies can grow more impressively, because they are improving on a lower, usually less-diversified base of revenue and earnings, and they tend to be nimbler than large, mature companies — a huge asset in a time of dynamic change in almost every industry.

#-ad_banner-#The S&P 400 Mid Cap Index dropped 11.4% from the beginning of 2016 through February 11 — a full-fledged correction. Since then, it’s rallied 11%, almost back to its end-of-year level. That’s a solid sign that investors are finding bargains among midsized companies and recognize that the economy is robust enough to support continued growth.

Some caution is in order. Despite the relative strength of the U.S. economy, many countries around the world are experiencing slower-than-expected growth — including large markets like China and Brazil. Europe also is struggling, for a slew of reasons. Companies that export overseas could be hurt by tepid demand and the continued strength of the dollar, which makes U.S. goods more expensive for foreign buyers. I’d also stick with mid-cap companies that have strong balance sheets and robust cash flow, in case our economy gets caught up in a global recession that’s worse than I envision.

And for now, I’d avoid mid-cap stocks in the oil and gas sector, which remains troubled due to historically low prices. When the energy sector rebound happens, there will be time to get into the next wave of winners. But it’s too early for that, unless you’re willing to risk big losses as small to midsized companies go bankrupt or get gobbled up by competitors at bargain prices.

Instead, I’m focusing on mid-cap stocks in consumer sectors. They’re in the sweet spot right now: benefiting from an economy in which a lot of people have jobs, interest rates are low and confidence is growing — but still valued reasonably because of residual concerns of economic slowdown, as well as the pervasive dissatisfaction among millions of Americans that is influencing the presidential campaign.

If you’re looking for mid-cap consumer winners, consider this stock, one of the best around — and a relative bargain right now:

Brunswick Corp. (NYSE: BC) is one of the world’s leading recreation-products makers, with a specialty in boats and marine engines (brands include Mercury, Mariner, MotorGuide, Bayliner, Sea Ray and Boston Whaler) and fitness equipment (Life Fitness, Cybex, Hammer Strength, SCIFIT, Lifecycle). The company sold its famed bowling business two years ago but continues to be the world’s #1 billiards equipment maker; that segment also sells ping-pong and foosball tables. Marine products account for about 80% of revenue, and about two-thirds of the company’s sales are to U.S. customers.

Brunswick has grown in recent years through acquisitions that bolstered its market-leading position in both boats and marine engines, but it’s also generating solid organic growth thanks to rising spending on recreation activities — a trend that should continue as the Baby Boom generation enters retirement years. Recreation boat sales also benefit from low fuel prices, which make boating a less expensive hobby. Fitness equipment use is also on the rise as more Americans heed medical advice to remain active in their golden years, either at the gym or at home (Brunswick sells to both markets). The company expects revenue to rise in the high single digits in 2016.

Brunswick has grown sales, earnings and free cash flow for three years straight while paying down debt, giving it flexibility to make further strategic acquisitions or use extra cash for share repurchases. At recent prices, the stock trades at only 12.6 times analysts’ consensus estimate for 2016 earnings per share and more than 20% below its 52-week high.

Risks to Consider: Brunswick is vulnerable to a weakening U.S. economy and a global recession.
    
Action to Take: Buy Brunswick below $47.

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