Definition

1. Adjective:
   • Relating to companies with a small market capitalization: The term "small-cap" describes stocks or companies that have a relatively small total market value, typically defined as less than one billion dollars. It is a classification used in finance and investing.

Usage

• "Small-cap" is used attributively before nouns like "stock," "company," or "fund" to indicate their market size category.
• It contrasts with terms like "mid-cap" (medium capitalization) and "large-cap" (large capitalization).

Examples

• Adjective:
  • The investor decided to diversify her portfolio by adding some small-cap stocks.
  • This mutual fund specializes in small-cap companies with high growth potential.
  • Small-cap investments are often considered more volatile but may offer higher returns.

Advanced Usage

• "Small-capitalization": A less common, full form of the adjective.
  • The small-capitalization segment of the market underperformed this quarter.

Variants and Related Words

• Small cap (noun): Can be used as a noun phrase to refer to a small-capitalization company or its stock.
  • That company is considered a small cap.
• Small-capitalization stock (noun phrase): A more formal term for a small-cap stock.

Synonyms

• Micro-cap: Refers to companies with an even smaller market capitalization, often under $300 million. (Note: This is a more specific, smaller sub-category.)
• Penny stock: Refers to very low-priced stocks, which are often but not always small-cap companies. (Note: This term focuses on share price rather than total market value.)

Related Terms and Context

• Market capitalization: The total dollar market value of a company's outstanding shares, calculated as (share price) x (number of shares). This is the key metric defining a "small-cap."
• Growth stock: A type of stock, often associated with small-cap companies, expected to grow at an above-average rate.
• Russell 2000 Index: A well-known stock market index that tracks the performance of 2,000 small-cap companies.

Adjective

1. of stocks of companies with a market capitalization of less than one billion dollars