Equity Investments - Analyzing a Company - Types of Stock

  1. Growth Company and Growth Stock
    A growth company is a company that consistently grows by investing in projects that will generate growth. A growth stock, however, is a stock that earns a higher rate of return over stocks with a similar risk profile.

    Feasibly, a company could be a growth company, but its stock could be a value stock if it is trading below its peers of similar risk.

  1. Defensive Company and Defensive Stock
    A defensive company is a company whose earnings are relatively unaffected in a business cycle downturn. A defensive company is typically reflective of products that we "need" versus "want". A food company, such as Kellogg, is considered a defensive company. A defensive stock, however, will hold its value relatively well in a business cycle downturn.
  1. Cyclical Company and Cyclical Stock
    A cyclical company is a company whose earnings are affected relative to a business cycle. A cyclical company is typically reflects products we "want". A retail store, such as The Gap, is considered a cyclical company. A cyclical stock, however, will move with the market in relation to the business cycle.
  1. Speculative Company and Speculative Stock.
    A speculative company is a company that invests in a business with an uncertain outcome. An oil exploration company is an example of a speculative company. A speculative stock, however, is a stock that has potential for a large return, as well as the potential for considerable losses. An example of speculative stocks can be found in the tech bubble, where investors put money into speculative stocks, but the investor could have been hurt financially or made large gains depending on the stock the investor invested in.
Technical Analysis


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RELATED TERMS
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in ...
  2. Cyclical Risk

    The risk of business cycles or other economic cycles adversely ...
  3. Defensive Stock

    A stock that provides a constant dividend and stable earnings ...
  4. Speculative Stock

    A stock with a high degree of risk. A speculative stock often ...
  5. Speculative Company

    A company with a significant percentage of its assets tied up ...
  6. Defensive Company

    A corporation whose sales and earnings remain relatively stable ...
RELATED FAQS
  1. Why is buying a utility stock known as defensive move?

    Utility stocks are known as defensive stocks for investors due to the fact that consumer demand will remain high even when ... Read Answer >>
  2. What are the benefits of investing in a cyclical stock?

    Understand the benefits of investing in a cyclical stock. Learn how an investor can use those benefits to potentially reduce ... Read Answer >>
  3. How does an economic downturn affect a cyclical stock?

    Discover the effects of an economic downturn on cyclical stocks. These stocks are highly leveraged to the business cycle ... Read Answer >>
  4. What are defensive stocks?

    The term defensive stocks is synonymous to non-cyclical stocks, or companies whose business performance and sales are not ... Read Answer >>
  5. Should I buy and hold a cyclical stock for long-term gains?

    Discover whether cyclical stocks are a good option for long-term investors. Cyclical stocks tend to be highly leveraged to ... Read Answer >>
  6. What other sectors besides utilities are known as defensive?

    See why certain sectors, other than utilities, are considered defensive and therefore more resistant to the downturns of ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
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