Large, medium and small cap stocks Stocks are also classified according to the total value of all their shares, which is called market capitalization. Companies with the highest market capitalizations are referred to as large cap stocks, and medium and small cap stocks represent smaller companies in turn. Many companies offer common and preferred shares. For example, Alphabet Inc.
, Google's parent company, includes Alphabet Inc. (GOOGL), its Class A common stock, and Alphabet Inc. (GOOG), its preferred class C stocks. By contrast, value stocks trade at a discount to what a company's performance might otherwise indicate, and tend to have more attractive valuations than the general market.
Securities, such as financial, health and energy names, tend to perform better during periods of economic recovery, as they generally generate reliable revenue streams. Investors can track the value of stocks by adding the SPDR Portfolio S&P 500 Value (SPYV) ETF to their watchlist. Growing stocks have outperformed equity stocks by approximately 5.93% over the past 10 years. Front-line stocks are well-established companies that have a large market capitalization.
They have a long successful track record of generating reliable profits and being leaders within their industry or sector. Conservative investors can put the most weight on their portfolio with front-line stocks, especially during periods of uncertainty. Several examples of front-line stocks include computer giant Microsoft Corporation (MSFT), fast-food leader McDonald's Corporation (MCD) and energy leader Exxon Mobil Corporation (XOM). Income stocks are suited to risk-averse investors seeking regular income by paying dividends.
Shares can also be classified according to the size of the company that issues them. One way investors can classify companies by size is by considering their market capitalization, which is the total value of all the shares in a company (calculated as the number of shares multiplied by the stock price). Often, an investor has a preferred strategy for choosing stocks from one or more categories according to one or more rating systems. Stocks can be classified into several categories based on several parameters: company size, dividend payment, industry, risk, volatility and fundamentals.