A Few Basics For Reviewing Stocks

 

Market Capitalization

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This is the total market value of a company’s outstanding shares.

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Type of Stock              Market Capitalization Range

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Mega cap                   More than $200 billion

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Large cap                   $10 billion to $200 billion

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Mid cap                      $2 billion to $10 billion

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Small cap                  $300 million to $2 billion

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Micro cap                   $50 million to $300 million

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Ticker

The ticker symbol (or ticker) is the 1 to 5 digit alphabetic code used to identify

the shares of a specific corporation.

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Sector

 

Sector refers to the broad business category a stock falls into. There is no standard

sector classification for different sectors. The most common include the following:

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• Basic Materials

• Consumer Goods

• Financial

• Health Care

• Industrial Goods

• Services

• Technologies

• Utilities

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Sector lists sometimes break consumer goods into staples and discretionary categories. Energy is also sometimes separated from basic materials. Telecommunications is also sometimes given its own sector.

It is important to have diversification between sectors when building your dividend growth portfolio.

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Volume

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Volume is the amount of shares of a stock traded. It is generally calculated as daily volume. There is additional risk with buying and selling thinly traded shares as the bid-ask spreads tend to be much higher. Higher volume typically means you will be able to buy and sell easily.

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