Stocks are all the stocks in which ownership of a company is divided ownership. In American English, the stocks are collectively referred to as “stock”. A single share of this stock represents a fractional ownership in whole percentage of the whole company. The term “stock” has various other meanings in different contexts. For instance, in the United States, the term “residual stock” is used to describe stocks which have been owned by the company and have returned to the company after a period of time. The term “in-kind stock” means that a company issues shares of stock to its employees for their benefit, but does not compensate them with cash.
A large number of different kinds of stocks exist in the world market. These stocks differ in their characteristics such as the number of shares they have, their date of issue, and the manner in which they are issued (common stock, preferred stocks, etc.). All the different kinds of stocks are traded on the stock markets. These stocks are also referred to as debentures in United States. All debentures are equal in terms of price to one and a half times their market price on the trading day of their issue. The prices of these stocks vary because of factors such as the company’s financial position, its financial history, current market scenario, industry characteristics, and so on.
Debentures are issued primarily by the companies to purchase or sell fixed assets, whereas common stocks are issues primarily for raising capital. Companies issue stock on two main methods. Firstly, they issue shares as debentures to their registered or potential shareholders (stockholders) and secondly, they issue common stock as an open register stock to the public for sale.
Common stocks represent the majority of shares outstanding. These shares have been issued in the open market by the company either on a penny or common stock basis. Penny stocks are those stocks usually sold for less than $5 per share, hence making them appealing to investors who may not be able to afford large amounts of capital. However, penny stocks still represent a considerable amount of risk for the investor because of their lack of reliability. As compared to debentures, common stock represents only a part of total issued shares. This means that a large volume of shares can influence the value of a company’s common stock.
On the other hand, growth stocks are those stocks that demonstrate a profit potential as their prices increase over time. There are many types of growth stocks including blue chip stocks, growth mid cap stocks, growth cap stocks, and growth small cap stocks. Growth stocks provide the investor with a chance to earn substantial profits in a relatively short period of time due to their ability to increase in value over a relatively short time. There are a number of characteristics that determine the value of growth stocks such as profit potential, name, and current stock price.
Intrinsic value investing refers to investing in stocks based on the intrinsic value of the company. The intrinsic value is also referred to as the book value of the company. Intrinsic value refers to how much it is worth compared to its book value. Most stock market investing strategies base their investment recommendations on the intrinsic value of stocks.