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Caterpillar is an iconic manufacturer of heavy equipment, power solutions, and locomotives. It is currently the world’s largest manufacturer of heavy equipment with over 13% market share in 2021. The company is divided into four reportable segments: construction industries, resource industries, energy and transportation, and Caterpillar Financial Services. Its products are available through a dealer network that covers the globe with over 2,000 branches maintained by 168 dealers. Caterpillar Financial Services provides retail financing for machinery and engines to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Caterpillar product sales.
Exxon Mobil (XNYS:XOM)
ExxonMobil is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2021, it produced 2.3 million barrels of liquids and 8.5 billion cubic feet of natural gas per day. At the end of 2021, reserves were 18.5 billion barrels of oil equivalent, 66% of which were liquids. The company is the world’s largest refiner with a total global refining capacity of 4.6 million barrels of oil per day and one of the world’s largest manufacturers of commodity and specialty chemicals.
Apple Inc. is another major U.S. tech company involved in the design, creation and sale of consumer electronics, personal computers and software. Apple is best known for its iPhone smartphone, iPad tablet and Mac computer hardware. Apple currently has a total market capitalization of over $1.31 trillion, and it reported a total revenue of about $260 billion in 2019.
Like Microsoft, Apple has consistently beat its consensus EPS estimates for the last 4 quarters. Its EPS is currently a solid $12.73, and the company has shown steady growth year after year. Apple is continuing to expand into 5G technology in the coming years, which can mean good news for investors.
McDonald’s Corporation is a global restaurant company. It owns and operates more than 36,000 restaurants in over 100 countries around the world. Many of its restaurants provide a drive-thru and delivery service for its customers.
The restaurant stock has a market cap of $170 billion and has an EPS of $6.33. It has an annual dividend yield of $5.16 per share. McDonald’s has high liquidity and trades over 1.8 million shares per day. It generated revenue of $21 billion in 2019.
Striking a contrarian note, adventurous buyers may want to consider technology icon IBM. True, IBM stock has had some rough years, disappointing many shareholders. Yet the company is levered toward many relevant industries, including the blockchain and cybersecurity.
Granted, IBM took a hit because of the pandemic, suffering a 4.6% year-over-year loss in revenue to $73.6 billion in 2020. Nevertheless, with the compelling businesses, IBM could be a surprise pick.
Large-cap stocks are stocks issued by corporations that have major influence over the economy. The “cap” in large-cap refers to the company’s “market capitalization,” which is equal to the company’s current share price multiplied by its outstanding number of shares. As the name suggests, large-cap stocks have very high market capitalizations — most large-cap stocks have capitalizations well above $10 billion.
Though you won’t find many stocks under $5 when you shop for large-cap stocks, these stocks can add a layer of safety and stability to your profile. Our guide to large-cap stocks will help you understand a little more about what sets these companies apart from the rest. We’ll also introduce you to a few ideas when it comes to large-cap investment opportunities.
Overview: Large Cap Stocks
A large-cap stock is a stock with a market capitalization over $10 billion. The best-known companies in the United States all have large cap stocks — and large-cap stocks make up around 90% of the total U.S. market. Some examples of large-cap stocks that are also household names include:
- Coca-Cola (NYSE: KO)
- Walmart (NYSE: WMT)
- Facebook (NASDAQ: FB)
- Clorox (NYSE: CLX)
- Unilever (NYSE: UL)
Large-cap stocks often have higher share prices, but they come with a number of benefits. Some of the biggest reasons why investors choose large cap stocks include:
- Stability: Companies that issue large-cap stocks are usually market leaders with very little price fluctuations. This makes them a safer investment when compared to penny stocks or stocks under $10.
- Transparency: Large-cap stocks typically have very transparent earnings reports and corporate structures. You can almost always find information, analysis and expert opinions on these stocks without doing hours of research, making it very difficult to get involved in a scam or price manipulation.
- Higher average trading volumes: Large-cap stocks have higher average daily trading volumes than mid-cap and small-cap stocks. This means that if you need to sell your investments, you’re much more likely to be able to unload your shares quickly.
Many large-cap stocks are also considered to be blue chip stocks as well. A blue chip stock is the stock of a company that has a long history of profitability, very little debt and an overall very consistent business in place. Blue chip stocks usually have high levels of diversification as well — if they have a rough quarter or year, their stock is less likely to see a drop in price.
Some investors are attracted to large-cap stocks because the companies that issue them often have the stability and profit to offer consistent dividends. A dividend is a portion of a company’s profit that is paid out to shareholders. A company might issue dividends on an annual, monthly or quarterly basis, and the amount of money shareholders receive during each payment is directly dependent upon the number of shares of stock they hold.
For example, if Company A is offering a dividend of $1 and you own 1,000 shares of the stock, you’ll receive $1,000 on the payment date. Though few companies are required to pay dividends, many large cap stocks elect to.
Best Online Brokers for Large Cap Stock
No matter if you’re purchasing thousands of dollars’ worth of large-cap stock or you’re browsing stocks under $20 to swing trade, you’ll need to place your buy or sell orders through a broker. A broker is a person or company who’s licensed to purchase or sell stocks and other securities on behalf of another person. Though most people think of the frantic brokers of Wall Street when they imagine a stockbroker, most brokerage firms now allow you to do all of your buying and selling online through a single platform.
Don’t already have a brokerage account? Consider a few of our favorites listed below.
- Best ForIntermediate Traders and Investors
- Best ForDesktop Trading
- Best ForActive Traders
- Best ForGlobalAnalyst Product
- Best ForMomentum traders
- Best ForFutures Trading
Features to Look for in Large Cap Stock
Large cap stocks are usually more expensive than mid- or small-cap stocks. Get the most out of your money by searching for these 3 features before you invest.
- A high earnings per share value: A company’s earnings per share (EPS) value is equal to its current profit divided by the number of shares of stock outstanding. When you invest, be sure to select a stock with a solid, positive EPS — this indicates that the company is consistently profitable and isn’t paying out more money than it’s bringing in.
- Consistently met targets: Each quarter, analysts set a “consensus EPS” for every large-cap company. A consensus EPS is an expert estimation of what a company should announce as its EPS before its quarterly earnings report is released. When you shop for large cap stocks, look for companies that consistently meet or beat the consensus — this indicates that there are less likely to be hidden financial issues within the company.
- A solid dividend yield: Instead of looking for large cap stocks that pay the highest dividends, search for ones with a solid dividend yield. A dividend yield is equal to a company’s annual dividend payout divided by its current share price. Dividend yields above 10% are usually considered to be riskier investments.
Leveraging Your Portfolio With Large Cap Stocks
Many investors put their money into large-cap stocks because they want to purchase securities that will safely hold their investment capital. While large cap stocks are generally much more stable and see fewer price fluctuations than stocks from companies with smaller market capitalizations, large-cap stocks aren’t the only way to invest in the long-term.
In addition to large-cap stocks, consider investing in a few total market or S&P 500 funds. These securities offer a higher level of diversification than buying individual large-cap stocks, which can better protect your investment.
With companies like Apple and Amazon hitting the mythical trillion-dollar market capitalization in 2018, you may have considered getting in on some of the action. Large cap companies have market caps of over $10 billion and include giants like Alphabet, Microsoft, and Intel. There are more options than you think.
Large cap stocks are much less risky than small cap and mid cap stocks, but the stocks can still find modest, regular gains.