What is Small Cap?

Sometimes referred to as a small market capitalization, small cap has to do with the total market value of a business. While there are various standards employed around the world to define a small cap, most financial analysts agree that when the market value is somewhere between $300 million and $2 billion in American dollars, the capitalization qualifies as small cap. Small caps represent a different type of investing option for interested parties, in that the investment in small cap stocks carries a relatively high degree of risk. Along with the risk, a small cap stock also generally carries a significant opportunity for growth. While it is not always the case, a small cap company is often a smaller company that is relatively new in the industry. The company is demonstrating enough potential to be considered an emerging company. That is, the company has been able to capture a share of the market and appears to be poised for future growth. The finances of the company appear to be ...  more