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Related to small-cap: large cap, Large Cap Stocks


A stock with a small capitalization, meaning a total equity value of less than $500 million.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


1. Of or relating to the common stock of a relatively small firm having little equity and few shares of common stock outstanding. Small-caps tend to be subject to large price fluctuations; therefore, the potential for short-term gains and losses is great.
2. Of or relating to mutual funds that invest in the stock of small-cap companies. See also microcap.
How can I determine whether a small-cap stock is reasonably valued?

A reasonably valued small-cap stock should be a company that has the potential to increase its earnings at a rate higher than the general growth of the economy. Because small-cap stocks generally have unusually high price-earnings ratios, the investor needs to look at each stock individually and compare its price-earnings ratios with the average price-earnings ratio of the appropriate small-cap stock index, such as the Russell 2000.

George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
With the Russell 2000 laboring almost 4% below its 200-day moving average and risk-off pall hanging over the market, TZA may be the best way to play small-cap stocks over the next several weeks, though data indicate the Direxion Dailly Small Cap Bull 3X Shares (NYSE:TNA) has recently taken in new money.
"Even in the earlier time period, the additional return to small-cap stocks was concentrated in companies with the highest level of default risk based on debt levels and business volatility," he said.
The cement sector displayed a brilliant performance and remained positive despite the unexpected removal of Maple Leaf Cement from the MSCI Global Small-Cap Index.
As shown below, flows into passive small-cap equity strategies spiked in the aftermath of Trump's victory; for the three-month period surrounding the presidential election (November 2016 through January 2017), $25 billion (Dh91.8 billion) flowed into passive small-cap strategies-roughly six times the average three-month flow over the past 10 years.
Putnam's small-cap equity team now numbers eight analysts.
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The Emerald Small-Cap Value Fund (NASDAQ: LSRIX) is managed by Rick Giesen and Ori Elan, who have managed the assets since the Elessar Fund's inception in October, 2012.
Exposure to mid-cap and small-cap stocks: Tax-saving funds typically buy shares of big as well as small companies.
"Small-cap companies have something of an advantage in this economy.
The anomaly of small-company stocks earning higher returns has been studied extensively by academics and investment practitioners, going back at least to 1980, when Rolf Banz, Ph.D., a professor at Northwestern University, scrutinized small-cap action on the New York Stock Exchange from 1926 to 1975.
There has been criticism of Banz's original work: the small-cap premium that Banz discovered was based on a handful of performance bursts, not consistent outperformance.