If you’re new to investing, there’s one question you need to answer before you can go any further. Should you stick to the big household names that you know and trust? Or are you better off investing in smaller firms that have the ability to grow more rapidly?
In this article we’ll take a look at the benefits of investing in big cap stocks over medium or small caps. Then you can make a qualified decision about which end of the market to focus on.
Whats the Appeal of Big Caps?
‘Big caps’ sometimes called ‘blue chips’ describe the shares of the biggest companies listed on the NYSE. Typically they have market capitalization in excess of $100 billion. Apple is a good example of a “Big cap” since they’re currently the biggest cap of all, with market capitalization in excess of $500 billion.
For many investors, it’s the sheer size of these blue chips that’s the main attraction. The firms often run a range of diversified businesses, so sales and profits should be fairly predictable, making them less risky.
They have large floats, so more shares are available to buy and are owned by a larger numbers of shareholders, which makes them more liquid (easier to trade in) than smaller firms. Big firms are also aware of the importance of dividends which they pay to major shareholders, such as pension funds. The management of big caps therefore try to keep dividend payouts on a steadily rising trend.
But one of the most important aspects of big cap stocks is how well researched they are compared to medium or small cap stocks. In theory this should cut the chance of any nasty surprises – although not eliminate them altogether, as BP’s Gulf of Mexico disaster recently showed.
Who Are the Big Caps?
So who are these big cap stocks anyway? Well most of them are household names, but not all of them. Below we’ve listed all the companies currently listed on the NYSE that have a market cap in excess of $100 billion. You might be surprised by just how many there are! You may also be surprised by those that are missing, you won’t find household names like HP, Dell or even McDonalds in this list.
Apple Inc. (NASDAQ: AAPL) designs and manufactures a range of personal computers and mobile communication devices. Their primary product ranges include iMacs, Macbooks, iPods, iPads and iPhones along with their OSX operating system, as well as the iLife and iWork productivity suits.
Apple also fueled the digital music revolution with its iTunes online music store and reinvented the mobile phone with its revolutionary iPhone and App Store and recently introduced their innovative iPad which is defining the future of mobile media and computing devices. You can find out more about the long term prospects of Apple stock here.
AT&T Inc. (NYSE: T) provides telecommunication services and related products, including wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services, telecommunications equipment, managed networking, wholesale services and directory advertising.
As of 2010, AT&T is the 7th largest company in the United States by total revenue; it’s also the 20th largest mobile telecom operator in the world with over 100.7 million mobile customers. You can find out more about the long term prospects of AT&T here.
Anheuser-Busch InBev NV (AB InBev)
Anheuser-Busch InBev N.V. (NYSE: ABV) is a Belgo-Brazilian brewery which engages in the production, distribution and sale of beers, soft drinks and non-carbonated beverages. It has a portfolio of market leading brands including beers Antarctica, Brahma, Bohemia, Quilmes and Skol. The company operates through the following segments: Latin America North, Latin America South and Canada. You can find out more about the long term prospects of AB Inbev here.
BHP Billiton (NYSE: BHP) is an Anglo-Australian multinational mining, oil and gas company headquartered in Melbourne, Australia. It engages in discovery, acquisition, development and marketing of natural resources. The company’s commodities include aluminum, energy coal, metallurgical coal, copper, manganese, iron ore, uranium, nickel, titanium and silver minerals. You can find out more about the long term prospects of BHP Billiton here.
BP p.l.c. (NYSE: BP) is a British global oil and gas company headquartered in London, United Kingdom. They’re engaged in the exploration, production, refining and distribution of natural gas, petroleum and other related products. The company operates through the following businesses: Exploration, Refining & Marketing, Alternative Energy and Integrated Supply & Trading. You can find out more about the long term prospects of BP here.
British American Tobacco
British American Tobacco p.l.c. (NYSE: BAT) is a British multinational tobacco company headquartered in London, United Kingdom. They operate through a number of subsidiaries which both manufacture and distribute tobacco products. The company’s principal activity is the manufacturing of cigarettes, smokeless snus, cigars and pipe tobacco. Its brand portfolio includes Kent, Dunhill, Lucky Strike and Pall Mall.
Chevron Corporation (NYSE: CVX) is an American multinational energy corporation headquartered in San Ramon, California, United States. They’re a fully integrated energy company and operate through a number of subsidiaries, which include petroleum refining, chemicals operations, mining operations, power generation and other energy services. You can find out more about the long term prospects of Chevron here.
China Mobile Limited (NYSE: CHL) is a Chinese state-owned telecommunication company that provides mobile telecommunication and other related services. It operates both Voice and Value-Added Business divisions.
The Voice division enables consumers to make and receive calls with a mobile phone at any point within the coverage area of their mobile telecommunications networks. Its services include local calls, domestic long distance calls, international long distance calls, domestic roaming, and international roaming.
The Value-Added Business division includes voice value-added services, which include caller identity display, caller restrictions, call waiting, call forwarding, call holding, voice mail and conference calls; short message services; mobile internet access. You can find out more about the long term prospects of China Mobile here.
Cisco Systems, Inc. (NASDAQ: CSCO) is an American multinational corporation headquartered in San Jose, California, United States, which designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry and provides other services associated with these products. It provides a broad line of networking products for transporting data, voice, and video within buildings and across continents.
Citigroup Inc. (NYSE: C) or Citi for short is a global diversified financial services company whose businesses provides consumers, corporations, governments and institutions with a broad range of financial products and services.
Citigroup has the world’s largest financial services network, spanning 140 countries with approximately 16,000 offices worldwide. They currently employ over 260,000 staff around the world, and hold over 200 million customer accounts in more than 140 countries. You can find out more about the long term prospects of Citigroup here.
The Coca-Cola Company (NYSE: KO) is a non-alcoholic beverage company headquartered in Atlanta Georgia. It provides diet and regular sparkling beverages and still beverages such as juice drinks, waters, sports and energy drinks, teas and coffees and milk and soy-based beverages.
The company’s portfolio of brands includes Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade and Minute Maid. Coca-Cola currently offers more than 500 brands in over 200 countries or territories and serves over 1.7 billion drinks each day. You can find out more about the long term prospects of Coca-Cola here.
Companhia de Bebidas (AM Bev)
Ambev (NYSE: ABV) formally Companhia de Bebidas das Américas is a South American brewery which produces and distributes beers, soft drinks and other non-carbonated beverages. It has a portfolio of market leading brands including Antarctica, Brahma, Bohemia, Quilmes and Skol.
Exxon Mobil Corporation (NYSE: XOM) is an American multinational oil and gas corporation which engages in the exploration and production of natural gas and crude oil. Its principal business is energy, involving both the exploration and production of, crude oil and natural gas, refining of petroleum products and as well as the transportation and sale of crude oil, natural gas and petroleum products.
ExxonMobil is one of the largest publicly traded companies by market capitalization in the world, having been ranked in the top 2 for the past 5 years, and is the second largest company in the world by market revenue. The company was originally founded by John D. Rockefeller in 1882 and is headquartered in Irving, TX. You can find out more about the long term prospects of ExxoMobil here.
Fomento Económico Mexicano, (FEMSA)
Fomento Económico Mexicano, S.A.B. de C.V. (NYSE: FMX) Fomento Economico Mexicano SAB de C.V. engages in the bottling, marketing, and distribution of trademark beverages of The Coca-Cola Company; and also operates OXXO, a chain of convenience stores.
The company operates through the following segments: Coca-Cola FEMSA, FEMSA Comercio, CB Equity, and Other. The company was founded by Isaac Garza, José Calderón, José A. Muguerza, Francisco G. Sada, and Joseph M. Schnaider in 1890 and is headquartered in Monterrey, Mexico.
General Electric Company
General Electric Company (NYSE: GE) is an American multinational conglomerate corporation headquartered in Fairfield, Connecticut, United States. They’re a technology and financial services company that develops and manufactures products for the generation, transmission, distribution, control and utilization of electricity.
They also manufacture aircraft engines and medical equipment. Its products and services include aircraft engines, power generation, water processing, security technology, medical imaging, business and consumer finance, media content and industrial products. You can find out more about the long term prospects of General Electric here.
GlaxoSmithKline plc (GSK) (NYSE: GSK) is a British multinational pharmaceutical, and consumer healthcare company headquartered in London, United Kingdom. They’re a research-based pharmaceutical and healthcare company that are engaged in the creation, discovery, development, manufacture and marketing of pharmaceutical and consumer health-related products.
The company’s product portfolio comprises of Consumer Healthcare Products and Pharmaceutical Products. The Consumer Healthcare Products group manufacture over-the-counter medicines, oral healthcare and nutritional healthcare products. Some of the products they produce include Panadol, Zovirax, Abreva, Breathe Right, Aquafresh, Dr. Best, Macleans, Lucozade, Ribena, and Horlicks. You can find out more about the long term prospects of GlaxoSmithKline here.
HSBC Holdings plc (NYSE: HBC) is a British multinational banking and financial services company headquartered in London, United Kingdom. They provide banking and financial services through four global businesses, including retail banking and wealth management, commercial banking global banking as well as markets and global private banking.
International Business Machines Corporation (NYSE: IBM) or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. They provide integrated technology solutions that leverage their knowledge of business processes and technology. International Business Machines (IBM) was founded by Thomas J. Watson Sr. on June 16, 1911.
Intel Corporation (NASDAQ: INTC) is an American multinational semiconductor chip manufacturer headquartered in Santa Clara, California, United States. They design and manufacture computing and communication components, such as microprocessors, chipsets, motherboards, and wireless and wired connectivity products.
The company’s key area of expertise is developing advanced integrated digital technology products, primarily integrated circuits, for industries such as computing and communications. They also develop platforms, which they define as integrated suites of digital computing technologies that are designed and configured to work together to provide an optimized user computing solution.
Johnson & Johnson
Johnson & Johnson (NYSE: JNJ) is an American multinational pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. They’re primarily engaged in the research and development, manufacture and sale of a broad range of products in the healthcare field. The company’s primary focus is on products related to human health and well-being. You can find out more about the long term prospects of Johnson & Johnson here.
JP Morgan Chase
JPMorgan Chase & Co. (NYSE: JPM) provides financial and investment banking services. They offer a range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, prime brokerage and research. The company was founded in 1968 and is headquartered in New York, NY.
Merck & Co., Inc. (NYSE: MRK) develops and markets a broad range of human and animal healthcare products. It’s a global research-driven pharmaceutical company that discovers, develops, manufactures and markets a range of vaccines and medicines to address previously unmet medical requirements. The company was founded in Germany in 1851 but was confiscated by the US government during World War I and subsequently established as an independent American company. You can find out more about the long term prospects of Merck here.
Microsoft Corporation (NASDAQ: MSFT) is an American multinational corporation headquartered in Redmond, Washington, United States. They develop, license, and support a wide range of software products and services for various computing devices. They’re primarily known for their operating systems for personal computers, servers, and mobile devices.
They also design and sell hardware, including the Xbox 360 gaming and entertainment console and accessories, the Zune digital music and entertainment device and accessories, and Microsoft personal computer hardware products.
Novartis International AG (NYSE: NVS) is a multinational pharmaceutical company based in Basel, Switzerland, that manufactures and markets a range of health care and nutritional products. They provide innovative healthcare solutions and offer innovative medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines and diagnostic tools, for both over-the-counter and prescription only markets.
Oracle Corporation (NASDAQ: ORCL) is an American multinational computer technology corporation that provides enterprise software and computer hardware products and services. Oracle was founded on June 16, 1977 by Lawrence Joseph Ellison, Robert Nimrod Miner and Edward A. Oates and is headquartered in Redwood City, CA.
PepsiCo Inc. (NYSE: PEP) is a global food, snack and beverage company, located in Purchase N.Y. The company operates through four main divisions: PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe and PepsiCo Asia, Middle East & Africa. PepsiCo own a number of famous brands including Frito-Lay and Quaker Foods as well as the Sabritas and Gamesa businesses based in Mexico.
PetroChina Company Limited (NYSE: PTR) is a Chinese oil company and is the listed arm of state-owned China National Petroleum Corporation (CNPC). PetroChina engages in a broad range of petroleum and natural gas related activities, including the exploration, development, production and sale of crude oil and natural gas; the refining of crude oil and petroleum products, as well as the production and marketing of basic petrochemical products. The company was founded on November 5, 1999 and is headquartered in Beijing, China. You can find out more about the long term prospects of PetroChina here.
Petróleo Brasileiro or Petrobras (NYSE: PBR) is a multinational energy corporation headquartered in Rio de Janeiro, Brazil. They’re primarily involved in oil and gas activities and operate in the following areas: Exploration and Production, Refining, Transportation, Marketing, Distribution, and Natural Gas and Power. The company was founded on October 3, 1953 by the then Brazilian president Getúlio Vargas. You can find out more about the long term prospects of Petrobras here.
Pfizer, Inc. (NYSE: PFE) is an American multinational pharmaceutical corporation. They’re primarily a research-based, global bio-pharmaceutical company. The company’s diversified global healthcare portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products. The company was founded by Charles Pfizer and Charles Erhart in 1849 and is headquartered in New York, NY.
Philip Morris International
Philip Morris International (PM) (NYSE: PM) is a holding company with subsidiaries and licensees that are engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside the United States of America. Philip Morris International was founded by Altria Group in 2008 and has operational headquarters in Switzerland.
Proctor & Gamble
Procter & Gamble (NYSE: PG) provides branded consumer packaged goods to consumers around the world. Its products are sold primarily through mass merchandisers, grocery stores, membership club stores, drug stores, high frequency stores, and neighbourhood stores which serve consumers in developing markets.
They manufacture products in the following segments: Beauty, Grooming, Health Care, Snacks and Pet Care, Fabric Care and Home Care and Baby Care and Family Care. The company was founded by William Procter and James Gamble in 1837 and is headquartered in Cincinnati, OH.
Qualcomm (NASDAQ: QCOM) provides wireless communication systems. The company is engaged in the development, design, manufacture and marketing of digital wireless telecommunications products and services based on code division multiple access (CDMA) technology.
The company was co-founded by Irwin Mark Jacobs, Franklin Antonio, Adelia Coffman, Andrew Cohen, Klein Gilhousen, Andrew Viterbi and Harvey White in July 1985 and is headquartered in San Diego, CA. You can find out more about the long term prospects of Qualcomm here.
Royal Dutch Shell
Royal Dutch Shell plc (NYSE: RDS-B), known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands, with its registered office in London, United Kingdom. The company was founded in February 1907 and is the fifth-largest company in the world (and the second-largest energy company).
It’s a vertically integrated business and engages in all areas of oil and natural gas production, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major renewable energy activities, including in biofuels, hydrogen, solar and wind power.
Sanofi S.A. (NYSE: SNY) is a French multinational pharmaceutical company headquartered in Paris, France. They’re primarily engaged in the research, production and distribution of a full range of pharmaceutical products.
The company was initially founded as Sanofi-Synthélabo in 1999 and is headquartered in Paris, France. The current company was formed as Sanofi-Aventis in 2004 by the merger of Aventis and Sanofi-Synthélabo. It changed its name to Sanofi in May 2011.
China Petroleum & Chemical Corporation Limited or Sinopec Limited (NYSE: SNP), is a state owned Chinese Petrochemical company, engaged in the exploration, production and transportation of petroleum products such as crude oil, and natural gas. Its operations are carried out through the following segments: Exploration and Production; Refining; Marketing and Distribution; Chemical; Research and Development and Others. The company was founded in February 25, 2000 and is headquartered in Beijing, China.
Total S.A. (NYSE: TOT) is a French multinational oil and gas company and one of the six “Supermajor” oil companies in the world. It engages in all aspects of the petroleum industry and operates through the following segments: Upstream, Downstream, and Chemicals. The Upstream segment covers oil and natural gas exploration; development and production; coal, gas, and power activities.
The Downstream segment conducts refining, marketing, trading, and shipping activities. It refines crude oil to make commercial products such as liquefied petroleum gas, automotive and aviation fuel, lubricants, fuel oil, and asphalt. It also supplies refineries with crude oil and transports refined products to consumer markets. The company was founded on March 28, 1924 and is headquartered in Courbevoie, France.
Toyota Motor Corporation
Toyota Motor Corporation (NYSE: TM) is a multinational car manufacturer which operates in the following segments: Automotive and Financial Services. The Automotive segment designs, manufactures, and distributes sedans, minivans, compact cars, sport-utility vehicles, trucks, vehicle parts, and accessories.
The Financial Services segment consists of vehicle financing and equipment leasing operations. The company was founded by Sakichi Toyoda on August 28, 1937 and is headquartered in Toyota, Japan.
Vale S.A., full name Companhia Vale do Rio Doce (NYSE: VALE) is a Brazilian multinational diversified metals and mining corporation engaged in the production and export of iron ore, pellets, manganese, and ferro-alloys, which are very important raw materials for steelmaking.
In addition to being the largest mining company in the world, Vale is also the largest producer of iron ore, pellets,and second largest of nickel. The company was founded on June 1, 1942 and is headquartered in Rio de Janeiro, Brazil.
Verizon Communications Inc. (NASDAQ: VZ) provides broadband and other wireless and wireline communications services to mass market consumers, business, government and wholesale customers. The company was founded in 1983 and is headquartered in the Verizon Building New York, NY.
Vodafone Group Plc (NASDAQ: VOD) is a British multinational telecommunications company which provides voice services, such as mobile voice communications and roaming, messaging services, including text picture and video messaging on mobile devices, data services, such as email, mobile connectivity and fixed broadband services.
Vodafone owns and operates networks in over 30 countries and has partner networks in over 40 additional countries. The company was founded in 1984 and is headquartered in Newbury, the United Kingdom.
Walmart Stores, Inc. (NYSE: WMT) is an American multinational retail corporation that operates through three main business segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment includes the company’s famous supermarkets which operate in every major U.S. town and city, as well as well as walmart.com.
Walmart International is comprised of wholly-owned subsidiaries operating in Argentina, Brazil, Canada, Japan, and the United Kingdom. It also offers a limited amount of consumer credit products, principally through Chile, Canada and Mexico.
And finally the Sam’s Club segment includes warehouse membership clubs in the United States and Puerto Rico as well as samsclub.com. It offers brand name merchandise at knock down prices. Products include hard goods, some soft goods and selected private-label items. The company was founded by Samuel Moore Walton and James Lawrence Walton on July 2, 1962 and is headquartered in Bentonville, AR.
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company. Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through its High Street stores, ATMs, the Internet.
It also provides affluent and high net worth individuals with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and trust. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.