Aiming for Balance

Article Excerpt

We always try to strike a balance in the information we provide — not too little and not too much. One bit of information that doesn’t get the attention it deserves is a company’s market capitalization or “market cap”. This is the value of all common stock it has outstanding. When analyzing a stock, we of course always look at its market cap. Now we have decided to add this figure to the information we routinely provide to you at the beginning of each of our recommendations. Market cap gives you one way to judge the potential impact of, say, an acquisition. A $100 million takeover is huge for a company with a $200 million cap. It’s near-negligible for a company with a $10 billion market cap, unless it says something — bad or good — about corporate direction. Market cap also helps provide context for other so-called “one-off” events, such as fines, lawsuits, business interruptions and so on. For instance, if Canadian Pacific (market cap…

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