Investing

Industry-Type Stock

These stocks are worth noting:

Defensive stocks

Defensive stocks typically have prices which tend to remain stable when the market declines; some may even grow. Industries that perform well during recessions issue them. The general idea is that consumers continue to spend money on their basic needs (food, clothing, etc.) and decrease spending in other areas (luxury items, travel, etc.). Debt collection companies also tend to perform well when the market turns sour.

Cyclical stocks

Cyclical stocks are those which usually move up or down in sync with the business cycle. Examples include the housing industry and industrial equipment companies, because these companies serve the needs of growing economies. Investors who do not mind buying and selling during market fluctuations may like cyclical stocks. Individuals who prefer to hold a stock for a long time may not like them, unless they can weather ups and downs in the stock’s value.

Gold stocks

Gold stocks comprise gold mining, exploration and production companies. Their value moves up or down in line with the price of gold.

Cyclical stocks usually move up or down in sync with the business cycle.

Treasury stock

Treasury stocks are those which have been bought back by the issuing company. These companies may buy their stock back from investors if they believe the value is underpriced by the market, as well as to consolidate ownership or improve their financial ratios. The company can then set aside the stock for future uses, such as debt payment or the awarding of stock options.

Disclosures