Level 3 Communications Larger Than S&P 500 Component CMS Energy

Dec 19 2013, 4:11pm CST | by

Level 3 Communications Larger Than S&P 500 Component CMS Energy
Photo Credit: Forbes Business

In the latest look at stocks ordered by largest market capitalization, Russell 3000 component Level 3 Communications, Inc. (NYSE: LVLT) was identified as having a larger market cap than the smaller end of the S&P 500, for example CMS Energy Corp (NYSE: CMS), according to The Online Investor. Click here to find out the top S&P 500 components ordered by average analyst rating »

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 Level 3 Communications, Inc. (NYSE: LVLT), the market cap is now $7.15B, versus CMS Energy Corp (NYSE: CMS) at $7.12B.
Click here to find out The 20 Largest U.S. Companies By Market Capitalization »/>

Below is a three month price history chart comparing the stock performance of LVLT vs. CMS (Note that we have found 3 splits in the LVLT split history):

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 indices will include the stock, and 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). And ETFs that directly follow an index like the S&P 500 will only own the underlying component of that index, selling companies that lose their status as an S&P 500 company, and buying companies when they are added to the index. So a company’s market cap, especially in relation to other companies, carries great importance, and for this reason we at TheOnlineInvestor.com find value to putting together these looks at comparative market capitalization daily.


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According to the ETF Finder at ETFChannel.com, LVLT and CMS collectively make up 5.75% of the First Trust Utilities AlphaDEX Fund ETF (FXU) which is lower by about 0.6% on the day Thursday.

See what other ETFs contain both LVLT and CMS »
At the closing bell, LVLT is up about 4.5%, while CMS is off about 0.5% on the day Thursday./>

Source: Forbes Business

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