What Is a Mega-Cap Stock? Here’s What Investors Should Know
Written by
Adam Palasciano
Edited by
Nicholas Morine
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Historically, investing in the stock market is one of the best ways to grow your money over time. There are various types of investments, including mutual funds, ETFs, bonds, and stocks.
In 2023, Gallup reported that 61% of Americans said they own stock, based on its April 2023 Economy and Personal Finance survey. This figure is up from 56% in 2021 and 55% in 2020. It’s also the highest percentage since 2008.
Stocks come in many forms and one in particular is a mega-cap stock. If you’re looking for long-term stable growth, you might want to consider investing in this type of stock.
What Is a Mega-Cap Stock?
WallStreetMojo defines a mega-cap stock as a publicly listed company with a market capitalization value of more than 200 billion. Most often, it’s a reputable market leader with a stable, well-established business plan like Amazon, Apple, Alphabet, Meta, Nvidia, and Microsoft.
These stocks are generally expensive but are safer to invest in, usually coming with a more predictable rate of return. Characterized by stable performance and lower risk, mega-cap stocks usually attract long-term investors. They’re also ideal for diversifying a portfolio that might already be full of high-risk stocks.
Mega-Cap Stocks vs. Large-Cap Stocks
The key differences between mega-cap stocks and large-cap stocks are as follows.
- Mega-cap stocks:
- Market capitalization of over $200 billion.
- Relatively greater price stability.
- Usually have high stock prices.
- Generally have more long-term growth opportunities.
- Large-cap stocks:
- Market capitalization between $10 billion to $200 billion.
- Relatively lesser price stability.
- Usually have lower prices than the mega-cap stocks.
- Generally have fewer growth opportunities.
Mega-Cap Stocks vs. Mega ETFs
Alternatively, a mega-cap ETF contains a basket of stocks, investing in firms with an average market capitalization value of more than $200 billion. Particularly for beginner investors, mega-cap ETFs offer more tax liquidity, efficiency and flexibility.
If you’re looking for long-term financial growth, consider investing in some mega-cap stocks or mega ETFs to boost your portfolio.
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