Investment School: What are the different types of stocks?

What are the different types of stocks?

Many of us wanted to choose the right stock at the right time and make a good profitable investment,but this is easier said than done. Before picking up the right stock, you need to figure out what kind of stocks that you would like to invest.There are a wide variety of stocks.Let us go through them.

1. Growth Stocks - These are the companies whose earnings growth is much higher than the other peer companies in the stock market. The tag of "growth stocks" rotates among various sectoral stocks as time evolves and it is not a fixed one. In the last 3 years, capital goods,infrastructure,realty stocks were considered as growth stocks.

2. Income Stocks - These are stocks which have a good rate of dividend paid out to the shareholders consistently over time. Mostly these will be companies from a sector wherein after establishment of the business, there will be constant flow of income. For eg, power generation sector. While it takes more capital and time to build the power plant, but once its commissioned, there is a constant stream of revenue and hence these companies keep giving constant dividend to the share holders.

3. Value Stocks - These are stocks whose market value is much lower than the real value of the stock.These have a very low PE value and the marketmen have not yet identified the true potential of the stocks.

4. Defensive Stocks - These are stocks which are not affected by economical cycles of growth and slowdown. For eg, Pharma sector. People will not stop buying medicines if the economy is slowing down or growing fast. These companies will have moderate growth of income over a longer time of time and have stability in revenues.

5. Cyclical Stocks - These stocks are influenced by the current state of the economy. If the economy is growing , these stocks get benefited with the higher growth rate and if it slowsdown,these stocks also have the effect in them. Eg. Banking,Real Estate.

6.Momentum Stocks - These stocks are those which drive the market and influence the trend or mood of the market to a greater extent. Eg. Infosys,RIL.

So before you put your penny into stock market,figure out on which category of stocks are u gonna invest.

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