Definition of Large Cap Stocks

The size of the company is one method of classification. "Cap" stands for capitalization. The calculation comes from the calculation of the outstanding shares times their price. Common classifications of stock are large cap, mid cap, small cap and micro cap stocks. Foreign stock uses only the ADRs, equivalent to stock, issued in the U.S. for their classification.

Size

Large cap companies have values from $10 billion to $200 billion.

Adjustments

Periodically the classifications according to size adjusts higher with inflation and market value.

Risk

Large cap stocks tend to be less risky, most of the time.

Price

Prices for large cap stock normally are higher than those for micro cap or small cap stock. Therefore, they fluctuate less dramatically.

Types

Large cap stock may be growth or value stock. Value stock has a better P/E ratio. Many of these give dividends.

Adjustments

There is a size larger than large cap stock. These are mega cap stock with values over $200 billion.