Last week, I examined mid-cap stocks and talked about why they’re a happy hunting ground for investors today. To summarize, investors have poured money back into U.S. stocks after the January swoon, as economic indicators are confirming that the U.S. economy remains on a growth path, with positive trends for employment and consumer spending, with low inflation and interest rates.

It’s true that the global economic picture looks precarious, so we can’t be complacent about risk. But companies that generate all or most of their revenue in North America should be fine over the next few quarters.

#-ad_banner-#In this environment, midsized companies stand a good chance to outperform expectations. The largest companies are safe havens in time of uncertainty, and many continue to look attractive. But as fears of a U.S. recession abate, the mid-cap sector could outperform — especially when it comes to attractively valued shares of companies catering to consumers. I told you about one such company earlier this week. Here are two more attractive targets in the mid-cap field:

Lamar Advertising (Nasdaq: LAMR) specializes in outdoor advertising. If that phrase evokes billboards, you’re right — but Lamar, though more than a century old, is a leader in 21st century variants on the venerable highway billboard: digital billboards, airport displays and advertising posted creatively in untraditional places, like the floors of subway stations. While online advertising is the fastest-growing segment of marketing, the products Lamar offers remain popular and effective to advertisers, as billboards are low-cost yet reach many potential customers.

Lamar has generated solid annual revenue growth of 3% to 5% and rising earnings in recent years. The bulk of Lamar’s revenue continues to come from traditional highway signs; Lamar owns or leases 145,000 spaces across North America, second only to CBS Outdoor. But digital now accounts for about a fifth of sales — and growing. Lamar’s diverse customer base, for which the company placed more than 200,000 ads last year, includes companies in the retail, restaurant, hotel and motel, health care, entertainment, sports, financial and gaming industries. Many of these businesses are in the consumer discretionary space, which I expect to thrive in 2016.

While continuing to grow, Lamar has focused lately on increasing profit margins and creating more shareholder value. The company converted to a real estate investment trust (REIT) in 2014 and initiated a quarterly dividend that was raised last month to 75 cents a share, which translates to a hefty 5.0% yield at recent prices. The company has a strong balance sheet and experienced, long-tenured management. 

Pool Corp. (Nasdaq: POOL) is the largest wholesale distributor of equipment, supplies and accessories for swimming pools — residential, community and commercial. If it’s used to build, maintain or enjoy a pool, this company distributes it: pumps, heaters, filters, lights, chemicals, repair tools, replacement parts and the like; also construction materials such as concrete, electrical components, plumbing parts, liners and walls; and related products such as irrigation and landscaping systems, hot tubs, grills, furniture and pool toys. All told, Pool Corp. distributes more than 160,000 products.
Customers include companies that build, repair or maintain residential, community and commercial pools (such as at country clubs or hotels), as well as pool-supply retailers. Most of the company’s revenue comes from North America, with a small percentage from Europe, South America and Australia. About half of revenue comes from Sun Belt states: California, Florida, Texas and Arizona.

Recovering from a financial-crisis related hiccup in 2009, Pool Corp. has steadily increased its revenue, net income, cash flow and earnings per share every year since. Even including that bad year, its earnings per share have risen at an annualized rate of 21% over the past decade. Growth has been driven by population shifts toward the Sun Belt; even with home construction in a historic recession for several years after the crisis, the number of in-ground pools in the United States has risen from about 4.5 million to more than 5.2 million over the past decade. And about 60% of U.S. pools were built before 1999, driving a robust replacement and refurbishment market.

Pool Corp. is a growth stock, so its valuation tends to look high — but with double-digit earnings growth expected for the next few years, the stock is attractive today.

Risks to Consider: Both stocks rely on a growing U.S. economy to justify their valuations. Should U.S. growth slow, they could underperform.  

Action to Take: Buy Lamar Advertising below $60 and Pool below $83.

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This article originally ran on TopStockAnalysts.com: Two Mid-Cap Growth Stocks To Buy Now