Pure Play

AAA

DEFINITION of 'Pure Play'

A publicly traded company that is focused on only one industry or product. Pure play companies are popular with certain types of active investors who do a lot of research and want to make very specific bets on particular products or industry segments. For these investors, buying a company with several diversified business lines forces them to take risk in industries that they did not want to be invested in.

INVESTOPEDIA EXPLAINS 'Pure Play'

For some large companies, the allure of creating a pure play may make it worthwhile to spin off certain business lines or divisions into their own companies. Occasionally, the market will value the two resulting companies at a higher value than they did the original firm. This can be particularly true in hot industries and where there are few pure play companies to invest in that are already in the market.

RELATED TERMS
  1. Play

    A slang term that describes the positive aspects of an investment ...
  2. Stock

    A type of security that signifies ownership in a corporation ...
  3. Research And Development - R&D

    Investigative activities that a business chooses to conduct with ...
  4. Conglomerate

    A corporation that is made up of a number of different, seemingly ...
  5. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
  6. Smart Beta

    Investment strategies that emphasize the use of alternative weighting ...
Related Articles
  1. Investing Basics

    Conglomerates: Cash Cows Or Corporate Chaos?

    Huge companies may not be as infallible as previously assumed. Find out why bigger isn't always better.
  2. Mutual Funds & ETFs

    Evaluating Green Equity Investments

    Learn how to find stocks that are both eco-friendly and profitable.
  3. Options & Futures

    Top 10 Green Industries

    Put a little green in your wallet by investing in these growing areas.
  4. Active Trading

    The Importance Of Segment Data

    Key financials often fail to provide insight into large cap companies.
  5. Investing

    What are green investments?

    Green investments are traditional investment vehicles (such as stocks, exchange-traded funds and mutual funds) in which the underlying business(es) are somehow involved in operations aimed at ...
  6. Investing

    What is a pure play?

    A pure play is a company that invests its resources in only one line of business. As such, this type of stock has a performance that correlates highly to the performance of the stock's particular ...
  7. Trading Strategies

    What are common investing mistakes in bear markets?

    Learn why investing in a tumultuous market can be challenging even for the most experienced investors. Avoiding these common mistakes is key in bear markets.
  8. Fundamental Analysis

    What are the risks associated with investing in the railroads sector?

    Learn about risks relating to investing in the railroad sector. Explore how the price of fuel, cost of labor and access to capital affects railroad companies.
  9. Professionals

    Why Investors Need to Rebalance Their Portfolios

    The best way to explain why one should rebalance their portfolio is to show what could go wrong if one doesn't.
  10. Fundamental Analysis

    What is the average price-to-book ratio in the oil & gas drilling sector?

    Calculating the price to book ratio for oil and gas drilling companies can provide insight for investors interested in understanding the value of a stock.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center