or "small-capitalization") stock The smallest, and generally considered to be, the riskiest class of stocks. Despite their risk and volatility, however, the small cap stocks also tend to hold the greatest potential for appreciation, according to historical comparisons with mid- and large capitalization stocks. Small caps have market values of under $500 million. Sometimes referred to as "emerging" stocks. (Also see mid cap stock and large cap stock.)
Companies with market capitalizations in the $250 million to $1.5 billion range are considered "small cap". Earnings for these companies often are expected to grow faster than earnings of the overall market which, in turn, could increase the stocks' share prices.
Companies with smaller capitalizations (usually under $650 million in total stock value). Small cap mutual funds invest in small cap companies that often have higher risk but also greater potential for capital gains.