For those Indian investors looking to invest in US stocks, there are several options to choose from. After all, the US economy is a thriving ground for some of the biggest companies in the world. From the FAANG stocks comprising of Facebook, Apple, Amazon, Netflix to Google, to some of the other top performing US stocks such as Tesla, Microsoft amongst others, the Indian investor can be spoilt for choices.
But, how to start identifying the right stocks to build a robust long-term portfolio? Market Capitalization – this can be a good starting point for newbies. When analysts and financial planners suggest owning large-cap stocks, they refer to the stock’s market capitalisation. High market capitalisation stocks fall in the large-cap category, followed by mid-cap stocks with lesser market capitalisation and then comes the small-cap category with even lesser market capitalisation.
So, how do you find out the market capitalization? Every listed company has a specific number of outstanding shares, i.e shares available for shareholders to trade on the stock exchange. Market capitalisation or market cap is the number of outstanding shares multiplied by the current price of the share. For example, a company with 10 million outstanding shares trading at $100 a share would have a market cap of $1 billion.
A look at the market-cap gives a relative picture of the stocks for a better comparison to investors. It helps the investor to learn the relative size of a company against another. Such an exercise can be done across all stocks listed on a stock exchange such as NASDAQ 100 or within a sector such as Pharmaceutical or Financials. Large-cap stocks with a high market cap are typically the industry leaders and most sought by the investors worldwide. They not only represent reputed and established companies but also provide adequate liquidity to investors.
As market capitalisation is a function of market price, the list of stocks may keep changing. Here are the top 5 US stocks by market capitalisation that you may consider adding to your portfolio:
Apple Inc. designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players. The Company sells a range of related software, services, accessories, networking solutions, and third-party digital content and applications. The Company’s segments include the Americas, Europe, Greater China, Japan and Rest of Asia Pacific.
Industry: Communications Equipment
Market Price: 119.26 USD
52 Week Range: 53.16 - 137.98 USD
Market Cap (MIL): 2,027,635.00 USD
Its products and services include iPhone, iPad, Mac, iPod, Apple Watch, Apple TV, a portfolio of consumer and professional software applications, iPhone OS (iOS), OS X and watchOS operating systems, iCloud, Apple Pay and a range of accessory, service and support offerings.
Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company’s segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing.
Industry: Software & Programming
Market Price: 216.51USD
52 Week Range: 132.53 - 232.85 USD
Market Cap (MIL): 1,636,923.00 USD
The Company’s products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings.
Amazon.com, Inc. offers a range of products and services through its Websites. The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices.
Industry: Retail (Catalog & Mail Order)
Market Price: 3,128.81USD
52 Week Range: 1,627.00 - 3,550.00 USD
Market Cap (MIL): 1,569,884.00 USD
In addition, the Company provides services, such as advertising. It also offers Amazon Prime, a membership program that includes free shipping, access to streaming of various movies and television (TV) episodes.
Industry: Computer Software: Programming, Data Processing
Market Price: $1781.38
52 Week Range: $1,818.06/$1,013.54
Market Cap: 1.203T USD
Facebook, Inc. is focused on building products that enable people to connect and share through mobile devices, personal computers and other surfaces. The Company’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus. Facebook enables people to connect, share, discover and communicate with each other on mobile devices and personal computers.
Industry: Computer Services
Market Price: 276.95 USD
52 Week Range: 137.11 - 304.67 USD
Market Cap (MIL): 788,834.60 USD
Source: Data and company profile as on 16 Nov, 2020 on Reuters website