Definition of Large-Cap Stock

Financial Terms Beginning with L

What is a Large-Cap Stock

A large-cap stock is the stock of a company that has a sizable market capitalization, which is generally $10 billion USD or more. Market capitalization, or market cap, is the total market value of a publicly traded company's outstanding shares, calculated by multiplying the current market price of a single share by the total number of outstanding shares.

(Market cap = Share price × Number of outstanding shares)

Large-caps are usually well-established, stable companies with a significant market presence, substantial resources and a long track record of success. Current examples of large-cap stocks are McDonalds Corporation (MCD), Abbott Laboratories (ABT), Walt Disney Company (DIS) and Adobe (ADBE). To see more large-cap stocks, click here.


Benefits of Investing in Large-Cap Stocks

  • Stability: Large-cap companies are typically more stable and financially secure as compared to smaller companies, making them a lower risk investment.
  • Dividends: Many large-cap companies have a history of paying consistent dividends, which can provide a steady income stream for investors.
  • Global Presence: Large-cap companies often have a strong global presence, which allows them to benefit from diverse revenue streams and reduce the impact of regional economic downturns.
  • Liquidity: Large-cap stocks usually have high trading volumes, providing strong liquidity for investors who want to buy or sell their shares.

Challenges of Investing in Large-Cap Stocks

  • Slower Growth: Large-cap companies are generally more mature and have less room for rapid expansion as compared to smaller companies. As a result, their growth rates might be slower, which can lead to lower returns for investors.
  • Sensitivity to Broader Market Trends: Due to their size and stature, large-cap stocks can be more susceptible to broader market trends, global economic shifts and regulatory changes. This can make them more vulnerable to market downturns or negative sentiment, which affects their stock prices.
  • Limited Undervalued Opportunities: Large-cap stocks are usually more widely followed by analysts and institutional investors, making it less likely for investors to find undervalued opportunities as compared to lesser-known small-caps or mid-caps.
  • Heavy Index Weighting: Large-cap stocks are often heavily weighted in major market indices, which can result in a significant impact on the performance of index-tracking investments during market fluctuations. This means that an investor's portfolio may be more exposed to market movements if it has a high proportion of large-cap stocks.
  • Innovation and Adaptability Challenges: While some large-cap companies can maintain innovation, their large size and complex organizational structures can sometimes make it difficult for them to adapt quickly to market changes or technological advancements as compared to smaller, more agile companies.

When investing in large-cap stocks, it is important to conduct thorough research on the company's financial health, growth prospects, competitive advantages and management team before making an investment decision. Investors should also consider their risk tolerance, investment goals and time horizon to determine if large-cap stocks are a suitable addition to their portfolio.

GlobEx Markets Financial Dictionary of Terms, Phrases and Concepts

The GlobEx Markets financial dictionary is a reference resource that provides the definitions and explanations of various financial terms, phrases and concepts that are used in international finance and global investing. It includes a broad range of financial terms, such as those related to stocks, bonds, currencies, commodities, options, futures, crypto and much more.

A financial dictionary can be useful for anyone who wants to learn more about finance and investing, or who works in the financial industry. It can help clarify the meaning of technical terms and the language used in financial publications, reports and other sources.

Benefits of the GlobEx Markets Financial Dictionary

There are several benefits to using the GlobEx Markets financial dictionary, including:

  • Clarifying Technical Terminology: The financial world is filled with complex terms and language that can be confusing to those who are not familiar with it. A financial dictionary can help clarify the meaning of technical terms and make them more understandable.
  • Improving Financial Literacy: By learning the meaning of financial terms, phrases and concepts, you can improve your overall financial literacy and gain a better understanding of the workings of the financial world.
  • Enhancing Communication: A financial dictionary can help improve communication among financial professionals by ensuring that everyone is using the same terminology, phrases and concepts.
  • Supporting Research: When conducting financial research or analysis, a financial dictionary can be a valuable resource for identifying and understanding key terms, phrases and concepts.
  • Facilitating Decision-Making: Understanding financial terms, phrases and concepts can help you make better-informed financial decisions, whether you are managing your own finances or making decisions on behalf of an organization.

Overall, the GlobEx Markets financial dictionary can help improve your understanding of international finance and global investing. It is a valuable tool for anyone who works in the financial industry or who wants to improve their financial literacy.

Related Investment Terms

Mega-Cap Stock

Nano-Cap Stock

Small-Cap Stock

View of NYC between the Brooklyn Bridge and Manhattan Bridge
New York, New York