Market capitalization is an important criterion used while screening and shortlisting the right stock among the thousands of companies listed on a stock exchange. The total value of shares of a publicly traded company is called the market cap. Market cap, which stands for ‘market capitalization,’ is a term used by investors to indicate how much a company is worth.
A company’s market capitalization is determined by dividing the number of shares of all outstanding stock by the current stock price. A company’s market capitalization, for example, would be $100 million ($100 multiplied by 1,000,000 shares) if it issued one million shares of stock trading at $100 each. Market capitalization, commonly known as cap, refers to the valuation of a company on the stock exchange
But, what do these numbers show? They help one to categorize them under different buckets. According to their size, companies are usually divided into one of three major groups: large-cap, mid-cap, and small-cap.
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Large-cap: Market value of $10 billion or more; mostly established, mature businesses with solid reputations.
Midcap: Companies with a market value between $3 billion and $10 billion; these are generally well-established businesses operating in rapidly expanding markets.
Small cap: $3 billion or less in market value; usually young businesses serving specific markets or emerging industries.
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Large-cap stock investments are often seen as more conservative than small- or mid-cap stock investments, possibly offering less risk in exchange for less aggressive growth potential. Larger companies often have more stable and mature businesses because they have grown stronger over time and have survived trying business conditions.
Larger organizations, however, may be holding back growth potential because they have already taken their best chance to expand at their current size.
Here are the top 10 companies with the highest market capitalization
- Apple ( AAPL ) $2.351 T
- Microsoft (MSFT) $1.901 T
- Alphabet (GOOG) $1.303 T
- Amazon (AMZN) $960.28 B
- Berkshire Hathaway (BRK-A) $696.55 B
- Tesla (TSLA) $606.20 B
- UnitedHealth (UNH) $500.96 B
- Johnson & Johnson (JNJ) $467.67 B
- Visa (V) $460.99 B
- Exxon Mobil (XOM ) $452.43 B