Understanding Market Cap and Share Price

techmanga June 27, 2021 0 Comments



Robinhood stocks: Beyond Meat (BYND)


Source: calimedia / Shutterstock.com52-week range: $48.18 – $181.75The plant-based food maker Beyond Meat is one of the stocks that gets a lot ofshort-term trading attention. Earlier in August, the California-headquarteredcompany released lukewarm second-quarter earnings. Its revenue topped theaverage estimate. However, the revenue of the company’s food-service businessdeclined close to 60 % YoY due to restaurant and fast-food-chain closuresduring the pandemic lockdown.Yet, most shareholders are quite hopeful that “weak” parts of the Q2 earningsare all temporary. As our lives increasing normalize in the rest of the year,the company is likely to report stronger metrics. Meanwhile, Beyond Meat hasbeen increasing its partnership with various other well-known brands,including McDonald’s (NYSE:MCD), Starbucks (NASDAQ:SBUX) and Yum! Brands’(NYSE:YUM), names that followers of Robinhood stocks would be familiar with.Recent research led by Christopher Gardner of Stanford University discussesthe protein-consuming habits of Americans, including various drawbacks andways to eat better. Both nationwide and globally, the debate on the effect ofanimal meat on environmental, health, and ethical concerns is indeedincreasing.Early June saw Beyond Meat shares reach new highs for 2020. Year-to-date, BYNDstock is up an eye-popping 75%. I expect the company to continue to be tradedas one of the most-traded Robinhood stocks in the rest of the year, too.

Berkshire Hathaway (BRK.A, BRK.B)


Source: Jonathan Weiss / Shutterstock.comBRK.A 52-week range: $239,440 – $347,400 BRK.B 52-week range: $159.50 – $231.61Since the late 1950s, legendary investor Warren Buffett and his long-timepartner Charlie Munger have transformed Berkshire Hathaway from a strugglingtextile manufacturer to a holding company with a market capitalization greaterthan $475 billion.In fact, BRK.A stock currently has the highest share price of any company inhistory. In 1964, each Class A share was just shy of $20. Now each share costsupwards of $293,000 (no, that’s not a misprint, this version of the stock hassimply never been split). Therefore, most investors would likely buy shares ofBRK.B, not BRK.A.Berkshire Hathaway’s regular 13F filings with the Securities and ExchangeCommission show the holdings in the company. Some of Buffett’s favoritecompanies are large-cap stocks, consumer brands, stocks that pay dividends andfinancials, including bank insurance companies and more recently fintechbusinesses.Buying into Berkshire Hathaway shares, either directly or indirectly through afund, offers exposure to a wide range of businesses. Buffett’s currentholdings include shares of Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Bank ofAmerica (NYSE:BAC), and Coca-Cola (NYSE:KO). You may note that all of thesecompanies are among the most traded Robinhood stocks.

SPDR S&P 500 ETF (SPY)


Source: Shutterstock52-week range: $218.26 – $339.08 Dividend yield (TTM): 1.8% Expense ratio: 0.0945% per year, or $9.45 on a $10,000 investment.The index, measures the stock performance of the largest publicly traded 500companies in the U.S. These companies make up around 80% of the overall U.S.stock market’s value and cover approximately 24 separate industry groups.For many investors, the S&P’s performance shows how U.S. equities, in general,are performing. This capitalization-weighted index is one of the most widelyfollowed equity benchmarks worldwide.Robinhood stock traders who want to gain exposure to the S&P 500, withoutnecessarily investing in specific stocks listed on the index, have been buyingthe SPDR S&P 500 ETF, an exchange-traded fund based on the index.The SPY ETF value proposition is simple: essentially, it tracks theperformance of the S&P 500 index. Investors gain exposure to the growth andprofitability of U.S.-based businesses without having to rely too heavily onany individual company’s performance.Microsoft (NASDAQ: MSFT), Apple, and Amazon are the ETF’s three largestholdings, making up about 17% of the fund’s roster. To be exact, SPY holds 505stocks, owing to multiple share classes for constituents such as Alphabet(NASDAQ:GOOG,NASDAQ:GOOGL) and Berkshire Hathaway plus a few others. SPY’s top10 holdings combine close to 30% of the fund’s list.SPY started this year around $320, and on Feb. 19, hit an all-time high of$339.08. February and March saw the novel coronavirus become a globalpandemic, affecting billions of people worldwide. As the size and nature ofthe health crisis became apparent, investors began de-risking their portfoliosand stocks were rapidly sold off. On March 23, SPY hit a 52-week low of$218.26.Since then, the comeback for the ETF has been remarkable as the fund hasreturned over 50% in less than five months. YTD, SPY is up about 4%.Tezcan Gecgil has worked in investment management for over two decades in theU.S. and U.K. In addition to formal higher education, including a Ph.D.degree, in the field, she has also completed all 3 levels of the CharteredMarket Technician (CMT) examination. Her passion is for options trading basedon technical analysis of fundamentally strong companies. She especially enjoyssetting up weekly covered calls for income generation. As of this writing,Tezcan Gecgil did not hold a position in any of the aforementioned securities.Top 25 Best US Stocks to Invest in 2021Here is a basket of the top 25 best US stocks to invest in 2021. These are thebest stocks to buy right now if you are looking for the best companies to growyour portfolio for long term. These companies have solid track records and areexpected to continue growing year by year.We compiled these US stocks picks with the following criteria: strongfundamentals, great profit return, index inclusion, and innovative potential.Many of the stocks from our picks also pay out dividends. That’s a big bonus!Note that we included the TP (Target Price) and BBP (Buy-Below-Price) of eachstock at the end section of the article. The target price is our valuationbased on price movement, momentum, and average financial analysts’ target. TheBBP is the margin to buy the stock to earn a profit of 10% or more. Let’sstart!Start Investing US Stocks with Zero Commission Fee Here >> Most Trusted Broker67% of retail investor accounts lose money when trading CFDs with thisprovider. You should consider whether you can afford to take the high risk oflosing your money.

1. Microsoft


Microsoft (Ticker: MSFT) is also one of the Big 4 Trillion Market Capcompanies in the USA. Having a 1.8 trillion market cap, Microsoft is also theTop 1 from Forbes Just 100 Companies. It truly deserves the number one spotamong the Best US Stocks to Invest in 2021. MSFT pays out regular dividends toits stockholders four times a year. Yay!Microsoft was founded by Bill Gates and Paul Allen, two of the richest men inthe world. The company is also one of the most successful software companiesin the world with many famous subsidiaries, including Skype, LinkedIn, XboxGame Studios, GitHub, and many more tech companies.Do not miss reading: “Top 5 Reasons Why We Invest in Microsoft Stocks.”

5. Apple


Apple (Ticker: AAPL) is one of the most iconic brands in the world. It is agiant tech company that invented the Macintosh, iPhone, iPad, Mac, AppleWatch, Apple TV, and many more innovative products and services. Apple Inc.created notable software platforms including iOS, macOS, watchOS, tvOS, andonline services App Store, Apple Music, iCloud, and Apple Pay.Apple Inc. is the first US company that reached the trillion market cap inhistory. Just recently, it crossed the 2 trillion market cap. It is thefourth-largest company in the US in terms of revenue.Despite the coronavirus, Apple has recovered and continued its rising trendthis month. AAPL is currently among the top stocks listed in the Dow Jones,Nasdaq 100, and S&P 500.

14. Netflix


Netflix (Ticker: NFLX) is the world’s leading streaming entertainment service,with 195 million paid memberships in over 190 countries. The company reportedadditional global paid net subscribers of 28.1 million in the first 9 monthsof 2020 and during the pandemic lock-down.The streaming entertainment giant currently ranked 164th in Fortune 500Companies. NFLX has over 230 billion market cap and is listed in the S&P 500and NASDAQ 100 index.

25. Berkshire Hathaway


Berkshire Hathaway (Ticker: BRK.B) is the giant holding company of legendaryinvestor, Warren Buffett. It is one of the favorite stocks of millennials. Thecompany ranked No. 6 in Fortune 500 Companies in 2020 among the largestcompanies in the USA in terms of revenue.Berkshire Hathaway also has a stock portfolio of popular companies like Apple,Coca-Cola, American Express, Bank of America, Wells Fargo, among others.BRK.B has over 590 billion market cap and is among the finest stocks listed inthe S&P 500. Berkshire Hathaway also manages well-known brands, includingDairy Queen, Fruit of the Loom, NetJets, GEICO, Helzberg Diamonds, PamperedChef, and Kraft Heinz and many more.Stock| Buy-Below-Price| Target Price —|—|— Microsoft (MSFT)| 271| 298 MasterCard (MA)| 359| 395 Alphabet (GOOG)| 2227| 2450 Amazon (AMZN)| 3750| 4125 Apple (AAPL)| 150| 165 Tesla (TSLA)| 818| 900 Visa (V)| 218| 240 Starbucks (SBUX)| 105| 115 NVIDIA (NVDA)| 568| 625 Walmart (WMT)| 150| 165 JPMorgan Chase (JPM)| 136| 150 Salesforce.com (CRM)| 255| 280 Square (SQ)| 250| 275 Netflix (NFLX)| 636| 700 Adobe (ADBE)| 486| 535 Paypal (PYPL)| 286| 315 McDonald’s (MCD)| 205| 225 Advance Micro Devices (AMD)| 100| 110 Boeing (BA)| 205| 225 ServiceNow (NOW)| 559| 615 Facebook (FB)| 273| 300 NextEra Energy (NEE)| 82| 90 UnitedHealth (UNH)| 350| 385 Home Depot (HD)| 295| 325 Berkshire Hathaway (BRK.B)| 227| 250 Disclosure: I am a long term investor of some of the stocks mentioned. I wrotethis article myself, and it expresses my own opinion. This content is forinformation purposes only and should never be considered as professionaladvice. Every investor has different risk tolerance and goals. Always do yourown research to meet your goals. All investments have risks. Risk only capitalyou’re not afraid to lose. I have no business relationship with the companieswhose stocks have been mentioned.

Other Stock Market Guides:


Understanding Stock Prices and ValuesThere is a common saying: “Don’t judge a book by its cover.” An equally validtruism for the investor could be: “Don’t judge a stock by its share price.”Many people incorrectly assume that a stock with a low dollar price is cheap,while another one with a heftier price is expensive.In fact, a stock’s price says little about that stock’s value. Even moreimportant, it says nothing at all about whether that stock is headed higher orlower.

Stock Price vs. Stock Value


The cheapest stocks—known as penny stocks—also tend to be the riskiest. Astock that has dropped from $40 to $4 may well end up at $0, while a stockthat goes from $10 to $20 might double again to $40.Looking at a stock’s share price is only useful when taking many other factorsinto account.

Understanding Market Cap and Share Price


Stocks are divided into shares to provide clearly distinguishable units of acompany. Investors then buy a portion of the company corresponding to aportion of the total shares.The actual number of shares outstanding for publicly listed companies varieswidely.One way in which companies control the number of available shares and howinvestors feel about their share price is through stock splits and reversestock splits. Stock prices can have a psychological impact, and companies willsometimes cater to investor psychology through stock splits.For example, many investors prefer buying stocks in round lots of 100 shares.A share price of more than $50 may turn off the average investor because itrequires a cash outlay of at least $5,000 to buy 100 shares. That’s a largefinancial commitment to make to one stock.As a result, a company that has had a good run and has seen its shares risefrom $20 to $60 might choose to do a two-for-one stock split. Now the stocklooks like a bargain to new investors. But its intrinsic value didn’t change.

How Stock Splits Work


A two-for-one split means that the company will double the number of sharesthat each of its current shareholders owns by simply dividing the currentprice of its shares in half. Two new shares will be exactly equal to one oldshare.A new investor might be more comfortable buying the shares at $30, making a$3,000 investment to purchase 100 shares. Note that the investor could havebought 50 shares before the split, and had the same percentage ownership inthe company for the same $3,000 investment.The current shareholder is pleased because that interest from new investorswill drive the price of the shares higher.This is why market capitalization is important. The company’s market cap willnot change due to the split. If a $3,000 investment means a 0.001% ownershipin the company before the split, it will mean the same afterward.

Berkshire Hathaway vs. Microsoft


An example of a high price that may give investors pause is Warren Buffett’sBerkshire Hathaway (BRK.A). In 1980, a share of Berkshire Hathaway sold for$340. That triple-digit share price would have made many investors thinktwice.As of July 24, 2020, Berkshire Class A shares are worth $291,261 each. Thestock rose to those heights because the company, and Buffett, createdshareholder value.At that price per share, would you consider the stock expensive? The answer tothat question, as always, does not depend on the dollar price of the shares.

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