Types of Stocks
Type of Stock: / Examples: / Investing Strategy:Blue-Chip Stock
Stocks of a large, well-established and financially sound company that has operated for many years / GE, Kellogg, 3M, Walmart, ExxonMobil, IBM, Disney, Apple / Bear- blue chips are issued by the largest and most respected companies that are usually leaders in their industry; Think: “Would Warren Buffett buy this?”
Income Stock
The stock of a company that pays higher-than-average dividends compared to other stock issues / BP, Johnson & Johnson, ConocoPhillips / Bear- income stocks remain relatively flat but pay a higher-than average dividend; many income stocks are also blue chips
Growth Stock
Shares in a company whose earnings are expected to grow at an above-average rate relative to the market / Amazon, Facebook, GoPro, Netflix, Actavis (Allergan), 3D Systems / Bull- growth stocks have higher than average potential returns and are likely to expand at a much faster rate than other companies; usually newer companies with entrepreneurial tendencies
Cyclical Stock
A stock whose price is affected by ups and downs in the overall economy / Ford, Caterpillar, Lowes’, GM, Priceline / Bull/Bear- cyclical stocks can be bullish investments if you try to time them by buying before an upswing or shorting before a downturn; cyclical stocks can also be bearish investments if you hold them for a long period of time to experience long-term gains
Defensive Stock
A stock that provides a constant dividend and stable earnings regardless of the state of the overall stock market / ExxonMobil, Procter & Gamble, Boeing / Bear- many defensive stocks are also blue-chip or income stocks; won’t make you a ton of money but are safe and reliable long-term investments
Large-Cap Stocks
Companies with over $10 billion worth of issued stocks and bonds / Apple, Google, Microsoft, Wells Fargo / Bear- large-caps are large, well-established companies that secure and reliable; some large-caps can be bullish investments, however, as they still have a lot of potential for growth
Small-Cap Stocks
Varies, but generally a company with less than $500 million worth of issued stocks and bonds / Galena Biopharma, Peregrine Pharmaceuticals, CTI BioPharma / Bull- small-caps are unpredictable and are issued by less-known, less-established companies; much higher risk= higher potential reward
Penny Stock
A stock that typically sells for less than $1/share, although it can sell for as much as $10/share / Terra Tech, MannKind, Pharmacyte Biotech, Plug / Bull- penny stocks are very volatile and usually have very large day-to-day or intra-day swings; for this reason, they are a popular choice among day traders