Large-Value Stock

Large-value stock. It sounds pretty simple. Just a stock with a large value. Berkshire Hathaway trading at $311,000 a share. Large-value stock, right?

Not quite. Berkshire might also be a large value stock...but the term has nothing to do with having a particularly large share price.

Instead, the term "large-value stock" combines two concepts. One is the idea of market cap. This stat (short for market capitalization) measures the size of the company's stock float.

Take the total number of shares outstanding and multiply it by the share price. That equation gives you a company's market cap. Large cap stocks are the big shots of Wall Street...the companies with the highest total value of outstanding equity. Berkshire Hathaway has a market cap of about $500 billion. Pretty large cap. Apple and Amazon have topped a trillion. Large as it gets.

The other concept at play is growth vs. value. A growth stock is one where the current finances don't reflect the stock's future value. You are buying shares now on the speculation that it might become something great down the road. A new streaming service that loses a lot of money, but is quickly adding subscribers. Or a biotech firm with a promising medicine working through the FDA pipeline. You're hoping these stocks will skyrocket in value once the market appreciates their potential.

Value stocks present more of a slow burn. They're established companies in mature industries. Your bet is that the stock price doesn't fully reflect the company's intrinsic value. To put it another way, you think the market undervalues what the company offers. Like a dented can of spam in the grocery store value bin...still delicious, but you're getting a great deal.

So a large-value stock is one that is both large cap and value. As opposed to a smaller cap stock, which is a growth prospect. Large cap and value, rather than a stock with a large value.