What is meant by large cap (big cap)?
Market capitalisation is calculated by multiplying the number of a company's shares outstanding by its stock price per share. So if a company’s stock price is $150 and is made up of 3 million shares, the large cap would equate to $450 billion. It therefore falls within the bracket of what is defined as a large cap because its valuation is above and beyond the $10 billion cap. In other words, it’s performing pretty well!
Large cap companies are usually found in the global indexes, such as the S&P 500 and FTSE 100. This is because they are companies which are well established, stable and perform well. They are leaders within the industry, offering innovative solutions – for example, Apple and Tesla who are leading the way in technology and green energy
KEY TAKEAWAYS
- A large cap company is one that has a capital valuation of $10 billion or more through its traded shares
- Examples of large cap companies include Amazon, Microsoft and Tesla
- Large cap companies are usually found in the global indexes such as the S&P 500 and FTSE 100
- If you have a low risk appetite, investing in large-cap stocks is a good way to make steady returns
Investing in large-cap stocks
Large cap stocks are considered a good investment option if you’re in it for the long haul. Whilst they may not generate quick returns than say a small-cap or mid-cap company with lots of growth potential, they are a safer option due to their stability. So if your risk appetite is low, large cap stocks are the way to go.
Large-cap examples
Consider some of the largest and most memorable companies in the world. Some examples would be:
- Apple
- Tesla
- Amazon
- Microsoft
- Exxon Mobil
- Coca Cola
…the biggest names out there basically!