6 Key Stock Categories That Everyone Should Know About
Why do you need to know these categories?
- Investing is more about expectations. If you’re not aware of what you own, you wouldn’t know what to expect which indicates that you don’t have a set goal or target.
- Make sure you build your portfolio around these categories, along with the usual rules of diversifying by sector.
- As soon as you choose to buy a stock, it becomes easier to have it into these 6 categories as it simplifies the follow-through and selling process. Visit MultiBank Group
Fast Grower:
What Is It: The easiest of all. These generally happen to be small and aggressive companies that are expected to grow by a minimum of 30% annually.
What To Expect: This is where you will find multi-baggers but it comes with relatively more risk than the ones below. The risk is associated with the market’s growth expectations and any small disappointment could make the stock plummet.
Slow Grower:
What Is It: These refer to mature firms for which you basically own the dividends. They are likely to increase just a little above the Gross National Product.
What To Expect: What you may expect here is what you would hope for from a high-interest paying savings account. Dividend growth and capital appreciation happen rarely and you need to keep these up for the sake of steady dividend payments.
Stalwarts:
What Is It: These are comparatively slow in terms of their growth but in general, if you compare them to the rest of the market, they are fast. These stocks cushion your portfolio when the market is down.
What To Expect: You could hope for these firms to remain steady irrespective of how the market is performing. Their returns may not go up or down dramatically, no matter whether the market is on a bull run or a bear run.
Turnaround:
What Is It: Turnarounds are firms which used to be high flyers but have now hit the ground. These are firms that haven’t budged much and are not likely to show any signs of growth anytime soon.
What To Expect: If you own these stocks, you must take into account the fact that you’re taking a big risk and could end up either making huge returns or losing your money altogether.
Cyclicals:
What Is It: These refer to firms which rise and fall largely because of macroeconomic and sector-specific conditions. In a recession, they have it hard while they are successful in a boom.
What To Expect: Everyone is aware of the cyclical but what is not common knowledge is the fact that they can be very volatile.
Asset Plays:
What Is It: These refer to the companies which own something valuable (gold, cash, oil, etc) that you have recognized but the experts like analysts and investors have not taken into consideration. In some cases, their market cap is lower than their net asset value, which draws value investors. Know more Latam
What To Expect: These companies are undervalued because not everyone knows about them. This is not where the quick profits are likely to come from.
