Large-cap stocks

In contrast, a small-cap company is defined as having a market capitalisation of anywhere between $300 million to $2 billion. Large and medium-cap stocks have the ability to grow faster than large-cap stocks, and can be a good investment if the company thrives. However, these can equally crash or retain the same market capitalisation for the whole lifespan of the company, and for this reason, small cap stocks are more volatile investments. The Russell 2000 index is perhaps the best known stock index that tracks the performance of a variety of small US stocks.

Quite often, small-cap companies do not yet have enough income to pay dividends to its shareholders, whereas large-cap companies can afford these payouts from years of steady cash flows and balance sheets. Read about some of the best-yielding dividend stocks​​ here.

Please note that small-cap stocks are not penny stocks​​, which are instead defined as trading on the stock market with a value of less than $5. Penny stocks sometimes have potential to substantially increase their market capitalisation; notable penny stocks that have reached large-cap status include JD Sports, Ford and Monster.

Industrial companies focus on manufacturing and distributing industrial goods. This can include machinery, engineering services, waste disposal, facilities, railway and airline operations and construction supplies.

Technology accounts for a large proportion of the stock market, with FAANG stocks​​ dominating the global market. Technology and electronics services can include but is not limited to software development, cloud computing, online advertising, mobile app development and home appliances.

The healthcare and pharmaceutical industries tend to provide stable business, no matter what is happening elsewhere in world economies. The wider healthcare sector covers research and development, biotechnology, vaccine trialling, manufacturing and retailing of pharmaceutical drugs, medical equipment and the development of hospital and care facility supplies. Read more about pharmaceutical stocks​​.

China stocks are some of the most prosperous in the world, which also focus mainly on the technology sector. Recently, China has made advances in 5G technology, as well as e-commerce, social media and streaming services.

Growth stocks​​ are companies that are showing major growth potential, even if they are already defined as a large-cap stock. This usually happens in periods of economic instability, such as the Covid-19 pandemic, which leads certain areas of the stock market to thrive, and others to collapse. Large-cap growth stocks usually have a high P/E ratio, which signifies the promising future of the company.