7 Types of Public Company You Should Know About
A public company is a company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over-the-counter market. Public companies are subject to different rules and regulations than private companies, such as disclosure requirements and corporate governance standards.
But not all public companies are the same. There are different types of public company that vary in size, structure, ownership, and purpose. In this article, we will explore seven types of public company that you should know about if you are interested in investing, working, or doing business with them.
1. Blue-Chip Company
A blue-chip company is a large, well-established, and financially sound public company that has a long history of stable and reliable performance. Blue-chip companies are often leaders in their industries and have strong brand recognition and customer loyalty. They usually pay regular dividends to their shareholders and have a low risk of bankruptcy. Some examples of blue-chip companies are Apple, Coca-Cola, IBM, and Walmart.
2. Growth Company
A growth company is a public company that has a high potential for growth in its revenues, earnings, or market share. Growth companies typically reinvest most of their profits back into the business to fund expansion, innovation, or acquisition. They may not pay dividends to their shareholders, but they offer the possibility of high returns in the future. Some examples of growth companies are Amazon, Netflix, Tesla, and Zoom.
3. Value Company
A value company is a public company that is undervalued by the market relative to its intrinsic value. Value companies usually have low price-to-earnings (P/E), price-to-book (P/B), or price-to-cash-flow (P/CF) ratios, indicating that they are trading at a discount to their true worth. Value investors look for value companies that have strong fundamentals, competitive advantages, or turnaround potential. Some examples of value companies are Berkshire Hathaway, Exxon Mobil, Intel, and McDonald’s.
4. Income Company
An income company is a public company that pays high and consistent dividends to its shareholders. Income companies usually have stable cash flows and low growth prospects, so they distribute most of their earnings to their investors. Income investors look for income companies that have a high dividend yield, a low payout ratio, and a history of increasing dividends over time. Some examples of income companies are AT&T, Johnson & Johnson, Procter & Gamble, and Verizon.
5. Small-Cap Company
A small-cap company is a public company that has a market capitalization (the total value of its outstanding shares) of less than $2 billion. Small-cap companies are often young, emerging, or niche players in their industries. They may have high growth potential, but they also face higher risks and volatility than larger companies. They may also have less liquidity and analyst coverage than larger companies. Some examples of small-cap companies are Chegg, Etsy, Roku, and Zillow.
6. Mid-Cap Company
A mid-cap company is a public company that has a market capitalization between $2 billion and $10 billion. Mid-cap companies are often in the middle stage of their life cycle, having outgrown the small-cap category but not yet reached the large-cap category. They may offer a balance between growth and stability, as well as between risk and reward. They may also have more flexibility and adaptability than larger companies. Some examples of mid-cap companies are Chipotle, Lululemon, Shopify, and Spotify.
7. Large-Cap Company
A large-cap company is a public company that has a market capitalization of more than $10 billion. Large-cap companies are often mature, established, and dominant players in their industries. They may have global operations, diversified products or services, and loyal customers. They may also have more access to capital, resources, and talent than smaller companies. Some examples of large-cap companies are Alphabet (Google), Facebook, Microsoft, and Visa.
These are some of the types of public company that you should know about if you want to invest in the stock market or work with them as a business partner or employee. Each type of public company has its own characteristics, advantages, and disadvantages that you should consider before making any decision.
Types of Public Companies and Their Global Demand
Public companies are businesses that offer their shares to the public through stock exchanges or over-the-counter markets. They have to disclose their financial and business information regularly to the public and follow certain regulations. There are different types of public companies depending on their legal structure, ownership, and market capitalization.
Some common types of public companies are:
Corporation
A corporation is a legal entity that is separate from its owners, who are called shareholders. A corporation can be listed on a stock exchange or not, depending on its size and requirements. Corporations have limited liability, which means that shareholders are not personally responsible for the debts or obligations of the company. Examples of corporations are Google, Chevron, and Procter & Gamble.
Public Limited Company (PLC)
A PLC is a type of corporation that is common in the United Kingdom and some other countries. A PLC has to have a minimum share capital and at least two shareholders. A PLC can also be listed on a stock exchange or not. A PLC has limited liability as well. Examples of PLCs are Tesco, BP, and HSBC.
Société Anonyme (SA)
An SA is a type of corporation that is common in France and some other countries. An SA has to have a minimum share capital and at least seven shareholders. An SA can also be listed on a stock exchange or not. An SA has limited liability as well. Examples of SAs are L’Oréal, Renault, and Airbus.
Aktiengesellschaft (AG)
An AG is a type of corporation that is common in Germany and some other countries. An AG has to have a minimum share capital and at least five shareholders. An AG can also be listed on a stock exchange or not. An AG has limited liability as well. Examples of AGs are Volkswagen, Siemens, and Bayer.
Global demand for public companies
The global demand for public companies varies depending on the industry, the economic conditions, and the consumer preferences. Some industries that have seen an increase in demand for public companies are:
Technology: Technology companies provide innovative products and services that enhance the efficiency, convenience, and entertainment of consumers and businesses. Technology companies have benefited from the digital transformation, the growth of e-commerce, the adoption of cloud computing, and the emergence of new trends such as artificial intelligence, blockchain, and 5G. Examples of technology companies are Apple, Microsoft, Amazon, and Alibaba.
Healthcare: Healthcare companies provide products and services that improve the health and well-being of people and animals. Healthcare companies have benefited from the aging population, the rising health awareness, the increasing spending on health care, and the development of new treatments and vaccines for various diseases. Examples of healthcare companies are Pfizer, Johnson & Johnson, Novartis, and Merck.
Consumer Staples: Consumer staples companies provide products that are essential for everyday life, such as food, beverages, household goods, and personal care items. Consumer staples companies have benefited from the stable demand for their products regardless of economic cycles, the expansion into emerging markets, the innovation in product quality and variety, and the adoption of sustainability practices. Examples of consumer staples companies are Coca-Cola, Nestlé, Unilever, and Procter & Gamble.
Some industries that have seen a decrease in demand for public companies are:
Energy: Energy companies provide products and services that generate or distribute energy from various sources such as oil, gas, coal, nuclear, hydroelectric, solar, and wind. Energy companies have faced challenges from the volatility in oil prices, the decline in demand due to the pandemic, the competition from renewable energy sources, and the pressure from environmental regulations. Examples of energy companies are ExxonMobil, Chevron, Shell, and BP.
Financials: Financials companies provide products and services that facilitate the flow of money in the economy,
such as banking, insurance, investment, and lending. Financials companies have faced challenges from the low interest rate environment, the increased regulation after the financial crisis, the disruption from fintech startups,
and the uncertainty from geopolitical risks. Examples of financials companies are JPMorgan Chase, Bank of America, Visa, and Berkshire Hathaway.
References:
http://webuser.bus.umich.edu/gfdavis/Papers/Davis-Reimagining-the-corporation.pdf
https://www.investopedia.com/terms/p/publiccompany.asp
https://en.wikipedia.org/wiki/Public_company
https://www.toppr.com/guides/business-studies/private-public-and-global-enterprises/types-of-companies-and-forms-of-organising-public-sector/
https://www.investopedia.com/terms/p/publiccompany.asp
https://www.investopedia.com/terms/b/bluechipstock.asp
https://www.investopedia.com/terms/g/growthstock.asp
https://www.investopedia.com/terms/v/valuestock.asp
https://www.investopedia.com/terms/i/incomestock.asp
