Penny Stocks, Medium and Large Caps

There are hundreds of different equities to invest in on various exchanges. Some are priced a few cents per share, others thousands of dollars.

All fall into one of three categories:

  • Small caps (aka penny stocks)
  • Medium caps
  • Large caps
The values for determining small, medium and large-cap shares can be vague and differ between countries but as an example, large caps in the US typically have a market capitalization of $10 billion-plus.

Market cap—or market capitalization—refers to the total value of a company's shares: The price of a share multiplied by the total number of outstanding shares gives you market cap.

For example:

A company with 10 million shares selling at $50 a share would have a market cap of $500 million.

Market capitalization is often used to make investment decisions as it gives investors an idea of the size of one company versus another company. But is bigger always better?

Investing in large-cap companies is thought to provide long-term rewards and less risk, as the companies are well-established and stable.

Mid-cap companies have great growth potential but are often seen as constrained by track record and resources.

Small-cap companies are often considered a high-risk investment choice due to factors like their limited financial resources. However, many companies fall into this category, and so there are many people who don’t want to lose out on the opportunities they offer.

Often shares are over or under-valued based on a variety of factors – some logical, some emotional. Like so much in investing, there are no right or wrong answers. Invest in penny stocks, medium or large caps, or a mixture of the three. But make sure you know your risk appetite, have a plan, and do your research.

New to investing and want to know more about the latest research?

Investing in stocks has been a great way to build wealth over time. The big challenge that investors face, though, stems from the fact that stock market returns are never guaranteed.
For some investors corporate actions might be a blessing in disguise while it's a curse for others, depending on which side of the profit line you stand.


Subscribe to our Blog

Search all articles

    Previous Blog

    Let Us Help You, Help Yourself

    Open an account in user 5 mins and start investing in you.