What Are Blue Chip, Middle Cap, and Small Cap in Stock Investment?

What Are Blue Chip, Middle Cap, and Small Cap in Stock Investment? – Blue chip, middle cap, and small cap stocks are terms that are often used in the capital market, especially related to stock investment. The term is used to distinguish types of stocks based on their market cap or market capitalization. Market capitalization is a measure based on the aggregate value of firms.

The calculation of market capitalization is based on the total multiplication of the company’s outstanding shares traded on the market. So what exactly are blue chip, middle cap, and small cap stocks? Understanding Blue Chip, Middle Cap, and Small Cap As explained earlier, the division of stock types based on market capitalization consists of blue chip, middle cap, and small cap stocks.

Blue chip stock is a type of stock from a company with excellent financial condition, and has been operating for many years. Get information, inspiration and insights in your email. Register an email Read also: What is Stock Delisting and How Does it Affect Investors? This condition is measured based on the company’s income which grows steadily every year and often distributes dividends to investors. Blue chip stocks are also often referred to as tier one stocks whose performance will affect the overall Composite Stock Price Index (JCI).

The stock market capitalization included in blue chip stocks is above Rp 10 trillion. Examples of blue chip stocks are stocks that are included in the LQ45 index. LQ45 is an index that measures the price performance of 45 stocks that have high liquidity and large market capitalization and are supported by good company fundamentals. The LQ45 index uses 45 issuers selected based on considerations of liquidity and market capitalization, with predetermined criteria.

There are a number of factors that are used as criteria for an issuer to be included in the calculation of the LQ45 index. One of the considerations is that the issuer has been listed on the IDX for at least 3 months. Some of the stocks included in the LQ45 index are ACES (Ace Hardware Indonesia Tbk), BBCA (Bank Central Asia Tbk0, BBNI (Bank Negara Indonesia Tbk), and BBRI (Bank Rakyat Indonesia Tbk). and Examples Meanwhile, mid-cap stocks or middle-cap stocks are shares of issuers or companies with a market capitalization of between Rp. 1 trillion and Rp. 10 trillion. Although they are not as big as blue chips, the stocks that fall into the category of middle cap stocks have good fundamentals.

Middle cap stocks tend to be stable and are categorized as stocks of companies that are still developing. On the other hand, these second tier companies have more aggressive movements. Some examples of second tier or middle cap stocks are PT Japfa Comfeed Tbk (JPFA) and PT Malindo Feedmill Tbk (MAIN). Meanwhile, small cap stocks are stocks with a market capitalization below Rp. 1 trillion.

The price movements of third-tier shares or small cap stocks also tend to be higher. ih is volatile or volatile. This is because the price of small cap shares tends to be cheap so it is easy for speculators to play. This third-tier stock is also often referred to as fried stock.