Small-capitalization stock

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Small-Capitalization Stock

A stock in a publicly-traded company with low amount of market capitalization. In general, a small-cap company has a market capitalization of less than $1 billion or $2 billion, but there is no specific definition. Some brokerages or exchanges have slightly different definitions of small-cap. Some indexes track small-cap companies, as do some exchange traded funds. See also: High-cap, Mid-cap.

Small-capitalization stock.

Shares of relatively small publicly traded corporations with a total market capitalization of less than $2.3 billion are typically considered small-capitalization, or small-cap, stocks.

That number is not used uniformly, however, and you may find small-cap defined as below $1.5 billion. Market capitalization is calculated by multiplying the market price per share by the number of outstanding shares.

Small-cap stocks, which are tracked by the Russell 2000 Index, tend to be issued by young, potentially fast-growing companies. Over the long term -- though not in every period -- small-cap stocks as a group have produced stronger returns than any other investment category. Mutual funds that invest in this type of stock are known as small-cap funds.

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Usually, we have a face-to-face talk with the management and visit the facilities of the company before recommending a penny or small-cap stock," says Gokul Raj P of HBJ Capital Services.
3 January 2013 -- Baltimore US-based investment management firm T Rowe Price (NASDAQ-GS: TROW) said that it closed its New Horizons and Small-Cap Stock Funds along with similar portfolios for institutional clients to maintain the integrity of the funds' investment strategies and to protect the interests of existing shareholders.
Also, the quick speculations that concentrated on the small-cap stocks in particular, continued its pressure over the market indices, especially the Price Index that witnessed a noticeable fluctuation around 5,500 point, it said.
Under the funds' new benchmarks, small-cap stocks will account for approximately 9-11 percent of each fund.
Fund managers and analysts warn that small-cap stocks already trade at valuations high above long-term averages, even after significantly lagging large-company shares in 2014.
Small-cap stocks can be powerful, though, and make up a big portion of global stock market value.
5 percent per 12-month period, small-cap stocks returned an average of 16.
SMALL-CAP STOCKS are a thorny problem for investors.