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
- 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.
Consider some of the largest and most memorable companies in the world. Some examples would be:
- Exxon Mobil
- Coca Cola
…the biggest names out there basically!