Definition of ‘Secondary Stock’
A stock that is considered riskier than blue chips because it has a smaller market capitalization. A secondary stock can relate to any type of company, in any industry. The primary definer of a secondary stock is the company’s market cap, with any company’s equity shares trading under a certain “large cap” level being considered a secondary stock.
Secondary stocks are more commonly referred to as mid-, small- or micro-cap stocks, depending upon their market capitalization. While market capitalization is a definite driver of a stock’s risk level, most view large-cap stock as less risky than secondary stocks, due primarily to their market cap. Secondary stocks however often times can be less volatile than large cap stocks, thus all else held equal, being a less “risky” investment than a large cap.