What is a Large Cap?

You already know the names of many large cap stocks, and they are generally some of the safest stocks on the market. 

A publicly-traded company that possesses market capitalizations ranging from $10 billion to $300 billion is considered a large cap stock. Market cap, or market capitalization, measures the total value of a company’s shares. This helps give insight into the size of the company. There are also micro, small, mid, and even mega cap stocks.

To give you an idea of how much of the market these companies command, the Dow Jones Industrial Average is a combination of 30 well-known large cap stocks, such as Verizon, Nike, Coca-Cola, and so on. These are the companies that will be around years from now. Of course, these aren’t the only large cap stocks, but just to give you a point of reference. 

While these stocks are generally safer, and add stability to your investment portfolio, they’re hardly a monolith. You can find growth stocks and value stocks among them. Many of them pay dividends (always good), and some offer substantial capital gains. They also include diverse sectors, covering everything from health care and pharmaceuticals to construction to consumer goods to technology. 

Even with this information, it’s always smart to do your research before you invest, whether it’s a large cap stock, a small cap, or an ADR. It’s not impossible for a multi-billion dollar company to lose significant value in the market. Of course, when one of these large cap stocks does drop in value, that could be a prime buying opportunity if the details are right.

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