Various Sized Companies Demonstrating Growth Spurtsby InvestorGuide Staff
It is easier for smaller companies to have significant growth spurts than larger ones. The reason for this is tied to the basic principles of supply and demand. Essentially, large-cap companies need more significant and substantial increases in demand to create the same increase in earnings as a smaller company - at least percentage-wise. Although large-cap companies will most likely have a larger increase in sales volume, the percentage of this increase tends to be lesser than smaller companies. Larger increases in earnings tend to translate into larger gains in stock prices, which is why CANSLIM stock strategy focuses more upon small-cap companies, but it still may consider large-cap companies that have substantial earnings growth.