A mid-cap company is one that has market capitalisation that is too small for it to be a blue chip (or large cap), but which is bigger than a small cap.

There are no strict rules for identifying a company as a mid-cap. In the UK companies in the FTSE 250 index are considered mid-cap.

There are some good arguments for paying particular attention to mid-cap shares.

  • They are less heavily followed and analysed than large companies, and therefore there is a better chance of finding opportunities the market has missed.
  • Being smaller than large companies, mid-caps are more likely to have room for growth within their industry.
  • As businesses that have reached a certain scale they tend to be more stable than similar smaller companies.
  • They tend to be less complex than large companies, and therefore easier to analyse.
  • Analyst coverage and attention from investors is sufficient to ensure that disclosure is usually reasonably good. Accounts and reports tend to be more informative than those of small companies.
Copyright Graeme Pietersz © 2005-2016