Key Takeaways
- 1Market cap = share price multiplied by total shares outstanding
- 2Size categories: mega-cap, large-cap, mid-cap, small-cap, micro-cap
- 3Larger companies tend to be more stable; smaller companies offer more growth potential
- 4Our model ranks stocks primarily within the large and mid-cap universe
#What Is Market Capitalization?
Market capitalization (market cap) is the total market value of a company's outstanding shares of stock.
Formula: Market Cap = Current Share Price x Total Shares Outstanding
For example, if a company has 1 billion shares outstanding and the stock trades at $50, its market cap is $50 billion.
#Size Categories
| Category | Market Cap Range | Characteristics |
|---|---|---|
| Mega-Cap | $200 billion+ | Global giants, household names |
| Large-Cap | $10-200 billion | Established, well-researched companies |
| Mid-Cap | $2-10 billion | Growth potential with some stability |
| Small-Cap | $300M-2 billion | Higher growth, higher risk |
| Micro-Cap | Below $300M | Speculative, illiquid |
#Why Size Matters for Investors
Large-Cap Advantages - More stable and predictable earnings - Higher liquidity — easy to buy and sell - More analyst coverage and transparency - Often pay dividends - Less volatile in downturns
Small-Cap Advantages - Higher growth potential - Less institutional ownership creates inefficiencies - More likely to be acquired at premium - Less correlated with mega-cap tech
The "Size Premium"
Academic research has documented a small-cap premium — the tendency for smaller stocks to outperform larger ones over very long periods. However, this premium has diminished in recent decades and comes with significantly higher risk.
#Market Cap and Our Rankings
Our stock universe includes approximately 3,000 U.S. stocks with market caps above $100 million. We rank all stocks together, but understanding size context is important:
- Large-cap stocks tend to score higher on stability
- Mid-cap stocks often score higher on momentum and value
- Small-cap stocks can score well on value but often lag on stability
Last updated: February 10, 2026