Snapshot Report

The Snapshot report is handy for checking market capitalization, valuation, float, and cash flow.

Market Capitalization

Market capitalization, computed by multiplying the number of shares outstanding by its recent share price, describes the company’s size or market value. You won’t have to do that calculation because most financial sites list each stock’s market capitalization. The market capitalization categorizes a company as micro-cap, small-cap, mid-cap, or large-cap. There’s no hard and fast rule that defines those categories, but here are my rules of thumb:

1. Micro-cap: below $100 million
2. Small-cap: $100 million to $2 billion
3. Mid-cap: $2 billion to $8 billion
4. Large-cap: $8 billion plus

When I looked up the market cap for Comverse, I found that it was $3.9 billion, in the mid-cap category.

There are no good and bad market caps. Large-cap companies are usually considered the safest category because they’ve generally been in business for years, are financially solid, and have survived a variety of economic ups and downs. Micro-caps and small-caps usually have the greatest growth potential because they are typically emerging companies introducing new products or entering new markets. However, micro-caps are usually too small to interest mutual funds and other institutional investors and consequently won’t have much analyst coverage, making them difficult to research. Large-caps generally outperformed the overall market in the 1995-1998 timeframe until tech and Internet firms took the spotlight. Small- and mid-cap firms shined after the tech bust in 2000 and were still outperforming in early 2002.

Avoid firms with market caps below $50 million because they’re too risky, and evaluate all micro-caps with caution. Otherwise, the choice of firms size to eliminate at this stage, if any, depends upon your preferences.