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Sales, Gains and Losses
Motely Fool
Published: April 28, 2026
Q. If a company has a lot of sales, can it still be a bad investment? -- L.C., Seattle
A. It could. Sales (also known as revenue) are what a company takes in from its products and/or services. But if it spends more than it takes in, it ends up with losses instead of profits. This all shows up on its income statement (sometimes called a "statement of earnings" or "statement of operations," among other names). The statement starts with sales at the top, and then subtracts costs such as raw materials, salaries, advertising and taxes, eventually arriving at net income, which can be positive ("net profit") or negative ("net loss").
Ideally, a company will have both growing revenue and growing profits. But even good companies can have a year or two of losses -- perhaps because they're spending heavily on growth or because they're facing a temporary challenge. And younger, smaller companies may have years of losses. Unprofitability isn't necessarily a deal-breaker, but it's safer to stick with companies that are reliably profitable.
Q. How small are "small-cap" companies and how large are "large-cap" ones? -- S.M., Biloxi, Mississippi
A. There's no universally agreed-upon categorization, but here's one we use: Microcap companies have market capitalizations (that is, total market values) of about $50 million to $300 million; small-cap, $300 million to $2 billion; mid-cap, $2 billion to $10 billion; large-cap, $10 billion to $200 billion; and mega-cap, more than $200 billion.
For some current examples, Walmart (recent market cap: $1 trillion) is a mega-cap company, General Motors ($66 billion) is large-cap, The Campbell's Co. ($6.6 billion) is mid-cap, Wendy's ($1.3 billion) is small-cap, and apparel company J.Jill ($169 million) is microcap.
Fool's School
Be a Smart Stock Investor
Here are some brief guidelines to keep in mind as you invest in stocks:
-- Invest only once you're ready. That is, you've learned a lot about stocks, don't have any high-interest-rate debt and have an emergency fund that can cover all your non-optional expenses for at least a few months.
-- Have reasonable expectations. Though the stock market has averaged annual gains close to 10% over many decades, any given year could bring a loss. Expect some of your stocks to be losers.
-- Invest as much as you can afford, as soon as you can, because your earliest invested dollars have the most time in which to grow for you.
-- Seek a margin of safety by aiming to buy stocks when they seem undervalued. Overvalued stocks are more likely to pull back.
-- Don't act on emotions, selling in a panic or buying greedily without regard to long-term value.
-- Avoid risky behaviors, such as buying penny stocks, investing on margin or day-trading. It can also be risky to buy shares in a business you don't understand well. It's smart to research companies to learn exactly how they make their money, how financially healthy they are, how much growth potential they have and what their risks and opportunities are.
-- Aim to be a long-term investor, hanging on to shares of great companies and/or funds for many years. Learn to be patient.
-- Track your performance. If you're not beating the market over several years, consider just investing in the market itself -- via a low-fee index fund.
-- Realize that simply investing in index funds, such as an S&P 500 index fund or a whole-market index fund, is a sound strategy for every investor.
-- Keep learning. The more you know, the better your portfolio might perform. Consider reading about great investors and great companies -- they can teach you a lot.
My Dumbest Investment
Broke My Own Rule
My most regrettable investing move? Well, I set a rule for myself when purchasing individual stocks. If the stock doubled in value, I'd sell half my shares, recouping my total investment and leaving the other half in the market as potential additional profit. I only violated that rule once -- and what a mistake! I bought stock in Panera Bread at $20 per share. After a while, it was at $40. I should have sold half, but this time I sold it all, thinking it couldn't go much higher. I forgot about it until I heard it was being bought out -- at $315 per share. I could have retired sooner. -- B.P., Brunswick, Ohio
The Fool responds: Deciding when and how much to sell can be tricky. Stay fully invested, and you have the most to gain -- or lose. Sell it all, and you might miss out on future gains. Selling some, as you liked to do, can be an effective compromise, recouping some or all of your original investment and still leaving you set up for more gain. It's worth thinking through each decision carefully, though, because many great stocks have doubled in value over and over and over. In such cases, as you learned, those who hang in there end up with the most.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Foolish Trivia
Name That Company
I trace my roots back to 1896, when my founder built his first motorized vehicle. (It featured four bicycle wheels and sported a four-horsepower engine.) In 1914, I started paying my workers more than twice as much per day for one hour less of work. My early models came only in black. I revolutionized car-making with my moving assembly line. Today, with a recent market value near $47 billion, I employ around 169,000 people globally. I sold nearly 4.4 million vehicles in 2025. My ticker symbol is not something you'd want to see on your report card. Who am I?
Last Week's Trivia Answer
I trace my roots back to my founder, who went from being a penniless drugstore owner to the richest man in Kansas in just five years. He kept me afloat during the Great Depression by buying distressed companies. Today, based in Texas, I encompass seven refineries in the U.S., and I can process 678,000 barrels of crude oil daily. My operations range from refining to midstream to marketing; my offerings include traditional and renewable fuels and lubricants, along with asphalt, roofing material and ingredients for medicines and cosmetics. My logo and ticker symbol evoke the Flintstones. Who am I? (Answer: HF Sinclair)
The Motley Fool Take
Solid Growth, Low Valuation
Sea Limited (NYSE: SE) is based in Singapore, and it's often referred to as the "Amazon of Southeast Asia." Its three business units make it a triple threat in the digital economy:
-- Shopee is Southeast Asia's biggest e-commerce platform, having processed 13.9 billion orders worth $127 billion in 2025.
-- Monee is Sea's digital financial services platform, lending money to Shopee merchants to help them grow their businesses and offering "buy now, pay later" loans to consumers. It had 37 million active borrowers at the end of 2025, up 40% year over year, and they held $9.2 billion in loans, which was up by a whopping 80%.
-- Finally, Garena is one of the world's top game development studios. It's responsible for global smash hits like Free Fire and Call of Duty: Mobile. It served over 633 million users during the fourth quarter of 2025.
Sea generated a record $22.9 billion in total revenue during 2025, a 36.4% year-over-year increase. It sports a strong balance sheet, ending 2025 with $11.1 billion in cash and equivalents on hand against just $510 million in debt. Best of all, its stock is attractively valued, with a recent price-to-sales ratio of 2.3, well below its five-year average of 3.7.
No company is risk-free, but given Sea's robust growth and low valuation, it seems a solid opportunity for long-term investors. (The Motley Fool owns shares of and recommends Sea Limited.)
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