What is a Mid Cap Stock?

John Sunshine

Market capitalization ranks stocks into a number of distinct groups. Mid cap stocks are in the middle rank and represent companies whose total market capitalization is between $2 billion and $10 billion US dollars (USD). Market capitalization is the product of the stock price and the number of stock shares issued, so if XYZ company has issued 1 billion shares and the stock price is $3 USD, then its market capitalization is $3 billion USD and XYZ company is a mid cap company. Its stock shares would be considered mid cap stocks.

Mid cap stocks are more risky than large cap stocks.
Mid cap stocks are more risky than large cap stocks.

This is important when considering an investment in a particular company. Each rank has certain stereotypical features that you can look for in the stock under consideration. Mid cap stocks are more risky than large cap stocks and less risky than small cap stocks.

Investors often invest in mid cap stocks using mutual funds.
Investors often invest in mid cap stocks using mutual funds.

Generally, risk of company failure decreases as the company increases in size. However, a mid cap stock also has better potential for growth than a large cap company. A very large company may have completely saturated its market, while a mid-sized company may have room to grow. So when considering an investment, you are basically trying to decide if the stock in question has the potential to grow into a large cap stock. If you are right and make the investment, you will have a successful investment.

If you do not like the idea of researching individual companies, you can still invest in mid cap stocks using mutual funds. There are many mutual funds that specialize in this type of stocks. Investors in these funds expect to achieve greater returns over the long run than those investing in large cap funds. However, the returns may be much more volatile over the short term. This means that, if you check your portfolio value every week or month, the investment in may be up a large amount one week and down a small amount the next time you check, while the large cap stock will be up a small amount every time.

Over time however, you will expect your mid cap stocks to have a larger return than the large cap stock. They are usually growth stocks, and while growth stocks are expected by many to outperform a mature or large cap stock, this is not always the case. Ultimately, the decision to invest in mid caps comes down to individual investment style and preference.

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Discussion Comments

anon171854

I am a housewife and did not know anything about shares and the stock market. It feels great to read and understand the concept.

anon149362

Thank you. mid cap is explained properly. I'm new to stock market. Helps my cause.

anon113085

Thank you very much for such a wonderful article. I'm totally new at the stock market. Thanks again.

anon110684

wonderfully explained. it was so simple to understand the basic. A very clear conception has been given about mid cap. Thank you.

anon93284

thanks for such clear information. it clears every doubt about midcap. it is very useful for a beginner in the stock market

anon83925

Very simple, precise and clear explanation. Good work.

anon78324

it is a very clear information mentioned in this article. i understood very clearly.

Thank you very much for providing this kind of information.

anon75561

it was really good. You have used simple english.

my advice to you is whenever you write, please use simple english. Thank you.

anon69394

Many thanks for the effort.I am a new player in the field of share marketing and hence such type of articles help a lot to me-like knowledge seekers.

Thanks a lot again. M K Watsalya.

anon67110

thanks a lot. it helped me to understand what is mid cap.

anon58711

its a very easily understood explanation. thanks a lot. likewise please explain other terms of stocks and share trading. thank you.

anon56102

Thank you very much for your explanation. it is very useful and i got a basic idea about midcap.

anon55555

i got an overview of midcap. thanks for all this but i want two know about a list of companies with banks in the mid cap. ajay

anon52333

Mid cap stock is very well explained.

anon48163

After reading this article, I have opened up my mind in the stock market and I think I will invest better. There was always a question mark about mid-cap. It is clear now. Thanks.

anon37242

I m a new investor. it was really helpful for me

sanosh

anon8999

Really an excellent post for newbies !

anon5789

Thanks for such a wonderful article.

I am new to the stock market, but after reading this article, I got answers to many of my basic questions.

Thanks again.

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