In the latest look at the underlying components of the S&P
500 ordered by largest market capitalization, Medtronic, Inc.
(Symbol: MDT) has taken over the #71 spot from General Motors Co.
(Symbol: GM), according to
Market capitalization is an important data point for investors
to keep an eye on, for various reasons. The most basic reason is
that it gives a true comparison of the value attributed by the
stock market to a given company's stock. Many beginning investors
look at one stock trading at $10 and another trading at $20 and
mistakenly think the latter company is worth twice as much - that
of course is a completely meaningless comparison without knowing
how many shares of each company exist. But comparing market
capitalization (factoring in those share counts) creates a true
"apples-to-apples" comparison of the value of two stocks. In the
case of Medtronic, Inc. (Symbol: MDT), the market cap is now $59.16
billion, versus General Motors Co. (Symbol: GM) at $57.55
Below is a chart of Medtronic, Inc. versus General Motors Co.
plotting their respective size rank within the S&P 500 over
time (MDT plotted in blue; GM plotted in green):
Below is a three month price history chart comparing the stock
performance of MDT vs. GM:
Another reason market capitalization is important is where it
places a company in terms of its size tier in relation to peers -
much like the way a mid-size sedan is typically compared to other
mid-size sedans (and not SUV's). This can have a direct impact on
which mutual funds and ETFs are willing to own the stock. For
instance, a mutual fund that is focused solely on Large Cap stocks
may for example only be interested in those companies sized $10
billion or larger. Another illustrative example is the S&P
MidCap index which essentially takes the S&P 500 index and
"tosses out" the biggest 100 companies so as to focus solely on the
400 smaller "up-and-comers" (which in the right environment can
outperform their larger rivals). So a company's market cap,
especially in relation to other companies, carries great
importance, and for this reason we at
find value to putting together these rankings daily.
MDT,GM makes up 3.84% of the First Trust Mega Cap AlphaDEX Fund ETF
At the closing bell, MDT is up about 1.6%, while GM is down about
1.6% on the day Friday.
The 20 Largest U.S. Companies By Market