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Large Caps Stock & Company Classifications

Large capitalization companies, or large caps, are the biggest in the country, and often the biggest in the world. This class of stock is distiguished by a market capitalization of $10 billion or more. The lower limit of large caps used to be $5 billion, but as big companies grow bigger and inflation continues, most investors are coming to agree that $10 is the new limit, with some even suggesting a market capitalization $12 billion or more. It is a fluid mark, and it will continue to change over the decades.

Market capitalization is determined by multiplying the number of the company's shares outstanding by the current dollar value of one share. While the precise market valueof a company can shift considerably in a single day, a company that achieves the size of a large cap usually remains a large cap, regardless of week to week price shifts.

Large caps are companies that have either been around for a long time, or whose excellent products, services and business modelling have given them a cutting edge over other companies in their industry.

Most nationally recognized companies are large caps, though a few nationally recognized companies are classified as mid caps. Examples of well-known large caps are Johnson & Johnson(JNJ), Home Depot (HD), Apple (AAPL) and Ford Motor Company (F).

Many large caps are companies that are almost unknown to the general public, but that own famous products known by all. A good example of this is Altria Group (MO), which owns Phillip Morris, the manufacturer of Marlboro cigarettes.

While some companies that have only recently become large caps may still be behaving like growth stocks, most are more stable and fall under the classification of income stocks and blue chips.

See also: