Related Definitions

Mid cap

  • Updated on

What is a mid-cap?

Shares in public corporations with market caps of $2 billion to $10 billion are classified as mid-cap stocks. Mid-cap companies and stocks fall between the small-cap and the large-cap categories. These stocks are said to offer a good mix of stability and prosperity.


  • Mid-cap stocks have more liquidity than small-cap stocks. Investors' all-time favourite stocks are mid-cap stocks!
  • Mid-cap firms have room to improve and become large-cap firms in the future.
  • Mid-cap stocks are more profitable and have a broader variety of earning options.

Frequently Asked Questions  

What are the differences between large-cap, mid-cap, and small-cap stocks?

Small-cap companies have a market capitalisation of $2 billion or less, mid-cap companies have a market capitalisation of $2 billion to $10 billion, and large-cap companies have a market capitalisation of more than $10 billion.

Additional categories include mega-cap, which has a market capitalization of $200 billion, micro-cap, which has a market capitalization of $50 million to $500 million, and nano-cap, which has a market capitalization of less than $50 million.

Investors consider a mid-cap business as profitable because mid-caps are projected to grow in revenue, market share, and productivity, as it is in the middle of its development curve.

Mid-caps are considered less volatile than small-caps, but riskier than large-caps, and have a moderate to heavy market presence.

As compared to small-cap companies, mid-cap companies react to market fluctuations with less vigour. However, as opposed to large-cap stocks, they have less flexibility in a bearish market.

Source: Copyright © 2021 Kalkine Media Pty Ltd

Large-cap stocks

Large-cap stocks belong to large, well-established firms with stable business models and are typically regarded as a safe investment. Large-cap companies have a stronghold on the market and are very secure. They maintain a firm grip on themselves during economic downturns or some other negative occurrence.

Furthermore, large-cap stocks would have typically been performing for decades, earning a solid reputation. They are a safe way to invest while reducing risk. In contrast to mid-cap and small-cap stocks, these stocks have lower volatility and are less vulnerable, which means that their prices remain relatively stable even through turmoil.

Large-cap stocks have lower growth prospects than mid- cap and small-cap stocks, making them a safer investment for those with a longer time horizon. Since there is a strong demand for large-cap stocks in the stock market, they seem to have more liquidity.

Mid-cap stocks

Mid-cap companies are in the growth phase growing and have the potential to grow into large-cap corporations in the future.

Since mid-cap companies are considered to be more volatile than large-cap companies, investing in them is quite riskier.

Mid-cap stocks are preferred by investors due to their higher rate of growth. Since demand for mid-cap companies' stocks is marginally lower, their liquidity is fairly low in comparison to large- caps.

Small-cap stocks

Small-cap firms are smaller than large-cap companies and have significant growth potential. These stocks are volatile because they have a lower chance of succeeding over time. As a result, such companies' stocks are wildly unstable and put investors at risk.

Small-cap firms have a track record of underperformance, but when an economy recovers from a downturn, small-cap stocks frequently outperform large-cap stocks.

Small-cap stocks with a high-risk tolerance have the best growth potential. The liquidity of small-cap firms is the lowest.


Source: Copyright © 2021 Kalkine Media

When is the best time to invest in mid-cap?

Mid-cap companies thrive during the business cycle's growth period when interest rates are still low. During the recovery of the economy, mid-caps outperform large caps.

What are the benefits of mid-cap stocks?

Mid-cap companies have a balance of growth and stability, and they are less volatile than small-cap stocks and have fewer chances of going bankrupt during a recession. These stocks have a fair chance of rising in value and payout big dividends to investors.

They also have higher earnings than small and large-cap companies. Managers of mid-cap companies may obtain low-cost loans to meet the growing market. They expand through capital equipment purchases, mergers, and acquisitions.

Since mid-caps have been around longer than smaller companies, investors will learn more about them. They are more reliable and have a long record of success.

Many mid-cap firms have more seasoned management teams and are financially more competitive than their small-cap peers. Some mid-cap companies may become as stable as larger-cap companies as they mature.

What are the threats of investing in mid-cap stocks?

Mid-cap companies have less capital, which makes them less sustainable than large-cap companies.

A value trap occurs when a business operates in low income with insufficient cash flow for an extended period. Value traps are common in mid-cap companies, especially those with low rankings.

The management and organisational infrastructure of mid-cap firms are less effective than that of large-cap companies. They are typically less well-equipped than large-cap firms.

Source: Copyright © 2021 Kalkine Media

Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.