Most Capitalized Stocks On The NSE And Why You Need Them

The stock market has a diverse range of stocks cutting across a wide range of industries from financial institutions, manufacturing, consumer goods (FMCG), Agriculture, and more.

Asides belonging to different industries, these companies are of different sizes. And when it comes to investing in the stock market, the size of the company matters.

The tool used to determine the size of any company is its market capitalization and this shows the value of a corporation by multiplying the stock price by the number of stocks outstanding. Companies that have market cap above $10 billion are generally considered to be large cap companies.

Smaller companies albeit quoted and having a track record of better performance might not have the stability to deal with unfavourable economic crisis. They could be burdened by volatility and might not have the required resources to take on opportunities.

That said, they are usually affordable to purchase and could grow into very high value stocks. In other words, they tend to have a potential for growth.

On the flip side, highly capitalized stocks or large companies typically have decades of experience in the industries they exist in. What this means is that, over time, they have tested and fine-tuned their processes.

They are also known to have vast resources and the right amount of money to make decisions even in unfavourable economic periods. One downside is that given their size, there is very little room for growth – except of course by divesting into other business lines or through expansionary measures.

Yet, one key implication of the difference between them is in terms of risk. In today’s unfavourable economic landscape, large cap stocks have the stability required to withstand storms to a larger extent.

In the Nigerian Stock Market, about 10 companies account for over 70% of the market capitalization of all equities listed on the NSE and if you are looking for stocks to invest in during these volatile times for a higher degree of capital preservation.

They could be costly and might not yield so much in terms of growth (as in price of their shares), but they generally pay good dividends.

Currently, the most capitalized stocks are: MTN Nigeria, Dangote Cement Plc, Airtel Africa Plc, Nestle, Guarantee Trust Bank (GTB), Zenith Bank, Stanbic IBTC, Nigerian Breweries Plc, Access Bank Plc, and United Bank for Africa Plc.

For more information about the companies, simply click on any company on the Yochaa Heat Map for real time data to guide your investment decisions.

Written by Lawretta Egba