noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin

1. Type of Stock
By: Noorulhadi
Lecturer GCMS Peshawar

2. • There are many different types of stocks
available and in order to meet your
financial goals, it's important that you
understand the differences between them.

3. Blue Chip Stocks
• Blue chip stocks are well-established,
nationally known, and generally financially
sound companies. Blue chip companies
have consistently demonstrated good
earnings and industry leadership. Blue
chips are typically less volatile than other
stocks and have a record of paying
dividends in both good and bad times.

4. Growth Stocks
Growth-stock companies have earnings and
market share expansion that exceeds the
industry average and the economy in
general. Growth stock companies typically
reinvest their profits to expand and
strengthen their businesses, retaining
most of their earnings to finance
expansion and paying little, if any,
dividends to shareholders. Investors are
attracted to these stocks because they
expect the stock price to go up as the
company grows.

5. Penny Stocks
• The term penny stock generally refers
to low-priced (below $5) stock,
which is traded over the counter
(OTC). Penny stocks are generally
considered a very high-risk
investment.

6. Value Stocks
• Value stocks are those that are considered
undervalued by value investors. Value investors
typically define undervalued stocks by their
book/market and price/earnings ratios. Often
value stocks represent companies with past
financial difficulties, whose potential for growth
has been underestimated, or that are part of an
industry that is currently out of favor with
investors.

7. Defensive Stocks
• These are stocks of companies
that provide necessary services, such as
utilities that provide electric and gas,
supermarkets that provide food, etc.
Because the companies representing
these stocks fulfill basic human needs,
these stocks tend to provide a degree of
stability for investors during recessions or
economic slowdowns.

8. Income Stocks
Income stocks typically pay high
dividends in relation to their market
price, making them attractive to
people who buy stocks for current
income. Historically, these have been
public utilities, but some blue chip
stocks may fall into this category as
well.

9. Cyclical Stocks
Cyclical stocks represent companies whose
earnings are closely tied to the business
cycle. When business conditions are good, a
cyclical company generally prospers and its
common stock price generally rises. When
the economy slows or falls into recession,
these companies' earnings and stock prices
typically fall. Airlines, automobiles, furniture
manufacturers, steel and paper producers
are examples of cyclical stocks.

10. Seasonal Stocks
The performance of these stocks
fluctuates with the seasons. For
example, retail companies' sales
and profits often increase at
Christmas and the start of the
school year.

11. International Stocks
Many investors use domestic (U.S.-
based) equities as an integral part of
their investment portfolios. However,
the U.S. equity markets represent
only about one-third of the total world
markets. To be truly diversified, you
should consider international equity
investments.