Mid-cap stocks offer many investors a sweet spot between volatile small-cap stocks and mature large-cap stocks. However, 2023 hasn't been that kind to mid-cap stocks. The SPDR S&P MidCap 400 ETF Trust (NYSEARCA: MDY) is up 8.9% in 2023. That's not too bad, but it's still about half of the performance of the S&P 500 index, which is up 15.9% for the year.  

The S&P 500's focus on technology stocks explains some of that discrepancy. Tech stocks have been among the year's strongest performers. By contrast, the MDY index is heavily weighted to financial, industrial, and consumer discretionary stocks.  

But long-term investors generally trade based on broad principles, not on a yearly trend. That's how to find consistently profitable stocks. One trend to pay attention to is that mid-cap stocks outperform large-cap stocks during an economic recovery. And since stocks are always forward-looking, mid-cap stocks will start to recover before the broader economy.  

With that in mind, three mid-cap stocks are currently undervalued and offer strong growth potential.  

This Stock is Serving Up Some Kicks for Investors 

Skechers U.S.A., Inc. (NYSE: SKX) is the third-largest footwear brand behind Nike, Inc. (NYSE: NKE) and Adidas. However, to the company's loyal consumers, Skechers is known for stylish, comfortable footwear that stands out for its innovation.  

That innovation is showing up in consumer demand. The company reported $7.45 billion in revenue in 2022. And management now forecasts revenue will reach $10 billion per year by 2026. The company also forecasts higher margins as supply chain pressures continue to ease. Analysts are forecasting earnings growth of 15% in the next 12 months.  

This is encouraging for investors concerned about investing in consumer discretionary stocks when consumers are backing away from discretionary purchases.  

In fairness, if you're a long-term owner of SKX stock, how you feel about the stock will depend on when you bought it. The five-year growth in the stock is an impressive 79%. However, if you go back to 2015, SKX stock is basically flat. 

This Mid-Cap is in a Sweet Spot for Short- and Long-Term Growth 

At its core, BorgWarner, Inc. (NYSE: BWA) is an automotive parts supplier. In 2023, consumers continue to extend the life of their current vehicle. That trend is showing up in the company's revenue and earnings. On August 2, BorgWarner posted $1.35 in adjusted earnings per share (EPS) on revenue of $4.5 billion.  

However, investors can also look at BorgWarner as a (potentially) undervalued EV stock. The company is a global leader in clean and efficient technology. One of its core products is its eTurbo technology which increases the power and density of its solutions, making it one of the cleaner options on the market. This will become more important as automakers transition to electric vehicles (EVs). 

BWA stock also has an attractive valuation at just 10x forward earnings. Earnings estimates are for 13% growth in the next 12 months and stock price growth of 30%. And with the stock down 10.7% in the 30 days ending August 14, BorgWarner is presenting investors with an excellent buy-the-dip opportunity.  

Don't Avoid the Energy Sector 

Energy stocks are a good idea for investors looking to put capital to work in the fall of 2023. For many investors, that means flocking into some large-cap "big oil" names. However, Range Resources Corporation (NYSE: RRC) is a mid-cap to look at if you're not looking for a traditional oil and gas stock.  

Range Resources is an exploration and production company focused on natural gas and natural gas liquids. Natural gas prices are on the rise after years of depressed prices. And as investors saw in 2022, natural gas offers some of the sector's best profit margins.  

The company is the seventh-largest producer of natural gas. And since location matters when it comes to exploration and production, it's important to note that the company has reserves in the Appalachian Basin as well as shale sites in Texas and Pennsylvania. 

The article "3 Undervalued Mid-Cap Stocks to Buy in August" first appeared on MarketBeat.