Other categories of stocks
Stock Market - Other categories of stocks.
Growth stocks, Blue chip stocks, Technology stocks, Speculative stocks, Stocks categorized by risk - Low risk, Mid risk and High risk stocks.
Growth Stocks
Growth stocks are stocks of companies experiencing rapid growth and are expected to continue growing in the future. A company with growth stocks is considered a stable company experiencing larger
sales as well as incurring reasonable expenses. Usually such companies invest money in new products. These stocks are attractive to investors since they allow investors to make money from a growing and
prospering company. However, these stocks can also be a risk. These stocks are often expensive, and of course there is no guarantee that a company will continue to grow and prosper as projected
Blue Chip Stocks
The term ’Blue chip’ is taken from the game of poker where the blue chips have the highest value. In the stock market, the companies who are considered leaders in their industries and show
promises of long-term success are referred to as blue chip companies. Blue chip companies and their stock are well-established, have a proven long history of the growth, a good reputation for dividend
payout, possess good quality products, and usually have a recognizable brand. These companies set the standards by which other firms in the field are judged. They are included in the Dow Jones industrial
average, which is an index of top 30 companies that are the key leaders in their industries. IBM, McDonald’s and Coca-Cola, for instance, are among the well known blue-chip companies. If you want
stocks that grow fairly readily, bear relative low risk in the long term, and pay moderate dividends, blue-chip stocks are for you. The problem is, however, that these stocks tend to be the most expensive;
Yet, over years they can produce a lovely profit.
Technology Stocks
Technology stocks are stocks bought from companies that are involved in the field of high technology. For instance, stocks of a computer or software provider or manufacturer are termed as technology or
tech stocks. The term is rather vague since many investors use the term technology stocks to refer to telecommunications stocks and biotechnology stocks.
Speculative Stocks
Speculative stocks are the high risk stocks coming from companies that are listed on the NASDAQ. There are fewer speculative stocks on the Dow Jones or other indexes. These stocks often offer a
greater chance for higher profit and, as you must have guessed, also pose a greater risk. They’re usually unpredictable. These stocks are generally good only for very confident investors who do not
mind facing significant losses.
Penny stocks
A penny stock is a common stock that trades for less than $5 a share and are traded over the counter (OTC) through quotation services such as the OTCBB or the Pink Sheets. The terms penny stock,
microcap stock, small caps, and nano caps are sometimes all used interchangeably, however per the SEC definition, penny stock status is determined by share price, not market capitalization or listing
service.
Low risk, Mid risk and High risk stocks
Some investors categorize stocks in terms of risk. The evaluations of low-risk, mid-risk and high-risk are far from precise - what one investor considers risky another investor may see as only somewhat
risky. In general, though, penny and speculative stocks fall into the high risk category, while stocks from banks and some utilities fall into the low risk category. Those stocks which have a good history of
dividend payout may be considered medium risk.
Knowing about the different types of stocks available shows you that you have many options when it comes to investing. Rather than thinking of stocks as something monolithic, you should consider all the
types of stocks and select those that best meet your goals and your investment.
Read: How stocks trade
Table of contents: Stock Market tutorial
1. Stocks: An introduction.
2. What are stocks ?
3. Types of stocks.
4. How stocks trade
5. How stock prices change ?
6. How to purchase stocks ?
7. How to read a stock table/quote.
8. Animals in stock market
9. Stock Market Tutorial: Summary.
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