Type of the stock
1) Penny Stocks
A penny stock is a stock priced under one dollar per share (or in some cases, under five dollars per share). Most penny stocks have only a few million dollars in net tangible assets and have a short operating history. Penny stocks are almost always small cap stocks, but the undo isn't necessarily true. The term "penny stock" is sometimes used in a critical fashion, since many penny stocks are virtually valueless and should be considered very high-risk investments. There are also many cases of fraud involving penny stocks each year. We propose that beginners guide clear of penny stocks.
2) Sector Stocks
Stocks are often grouped into different sectors depending upon the company's business. Standard & Poor's breaks the market into 11 different sectors. Two of these sectors, utilities and consumer staple, are said to be self-protective sectors, while the rest tend to be more repeated in nature. The other nine sectors are: transportation, technology, health care, financial, energy, consumer cyclical, basic materials, capital goods, and communications services. Of course, other groups break up the market into different sector categorization, and sometimes break them down further into subsectors.
3) Cyclical Stocks
Stocks can be classified according to how they respond to business cycles. Cyclical stocks are stocks of companies whose profits move up and down according to the business cycle. Cyclical companies lean to make products or offer services that are in lower demand during downturn in the economy and higher demand during upswings. The automobile, steel, and housing industries are all examples of cyclical businesses.
4) Defensive Stocks
Defensive stocks are the reverse of cyclical stocks; they are liable to do well during poor economic conditions. They are issued by companies whose products and services enjoy a steady demand. Food and utilities stocks are defensive stocks since people normally do not cut back on their food or electricity consumption during a downturn in the economy. But although defensive stocks tend to hold up well during economic downturns, their performance during upswings in the economy tends to be bland compared to that of cyclical stocks.
5) Tracking Stock
a tracking stock is a type of common stock that is together to the performance of a specific supplementary of the company. This means that the dividends and the capital gains for the stock depend upon the secondary rather than the company as a whole. Owning a tracking stock does not give the owner selection rights in the corporation, nor do owners of tracking stocks have a legal claim upon the general assets of the corporation. A company will sometimes issue a tracking stock when it has a very successful division that it feels is under appreciated by the market and not fully reflected in the company's stock price.
1) Penny Stocks
A penny stock is a stock priced under one dollar per share (or in some cases, under five dollars per share). Most penny stocks have only a few million dollars in net tangible assets and have a short operating history. Penny stocks are almost always small cap stocks, but the undo isn't necessarily true. The term "penny stock" is sometimes used in a critical fashion, since many penny stocks are virtually valueless and should be considered very high-risk investments. There are also many cases of fraud involving penny stocks each year. We propose that beginners guide clear of penny stocks.
2) Sector Stocks
Stocks are often grouped into different sectors depending upon the company's business. Standard & Poor's breaks the market into 11 different sectors. Two of these sectors, utilities and consumer staple, are said to be self-protective sectors, while the rest tend to be more repeated in nature. The other nine sectors are: transportation, technology, health care, financial, energy, consumer cyclical, basic materials, capital goods, and communications services. Of course, other groups break up the market into different sector categorization, and sometimes break them down further into subsectors.
3) Cyclical Stocks
Stocks can be classified according to how they respond to business cycles. Cyclical stocks are stocks of companies whose profits move up and down according to the business cycle. Cyclical companies lean to make products or offer services that are in lower demand during downturn in the economy and higher demand during upswings. The automobile, steel, and housing industries are all examples of cyclical businesses.
4) Defensive Stocks
Defensive stocks are the reverse of cyclical stocks; they are liable to do well during poor economic conditions. They are issued by companies whose products and services enjoy a steady demand. Food and utilities stocks are defensive stocks since people normally do not cut back on their food or electricity consumption during a downturn in the economy. But although defensive stocks tend to hold up well during economic downturns, their performance during upswings in the economy tends to be bland compared to that of cyclical stocks.
5) Tracking Stock
a tracking stock is a type of common stock that is together to the performance of a specific supplementary of the company. This means that the dividends and the capital gains for the stock depend upon the secondary rather than the company as a whole. Owning a tracking stock does not give the owner selection rights in the corporation, nor do owners of tracking stocks have a legal claim upon the general assets of the corporation. A company will sometimes issue a tracking stock when it has a very successful division that it feels is under appreciated by the market and not fully reflected in the company's stock price.
Muhammad Mahmood
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