Speculative Company

AAA

DEFINITION of 'Speculative Company'

A company with a significant percentage of its assets tied up in projects with uncertain returns. A speculative company participates in projects with high probability of failure. However, should a project succeed, the returns can be very large.


The stock of speculative companies is not necessarily classified as speculative stock, however, since the expected return of an established speculative company's stock (such as Exxon Mobil Corp or Shell Canada) can be reasonably estimated.

INVESTOPEDIA EXPLAINS 'Speculative Company'

Energy companies are an example of a speculative company, since they are continuously committing a significant percentage of their assets to exploration projects. These companies often experience many failures before a project succeeds. However, should they find a new source of oil or natural gas, the potential returns are huge.

RELATED TERMS
  1. Speculative Stock

    A stock with a high degree of risk. A speculative stock often ...
  2. Speculator

    A person who trades derivatives, commodities, bonds, equities ...
  3. Return On Assets - ROA

    An indicator of how profitable a company is relative to its total ...
  4. Defensive Company

    A corporation whose sales and earnings remain relatively stable ...
  5. Return

    The gain or loss of a security in a particular period. The return ...
  6. Risk

    The chance that an investment's actual return will be different ...
Related Articles
  1. Industry Handbook
    Investing Basics

    Industry Handbook

  2. Why Housing Market Bubbles Pop
    Home & Auto

    Why Housing Market Bubbles Pop

  3. Common Bond-Buying Mistakes
    Options & Futures

    Common Bond-Buying Mistakes

  4. Economic Meltdowns: Let Them Burn Or ...
    Economics

    Economic Meltdowns: Let Them Burn Or ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center