The investment world is as easy to understand as it is difficult to participate in it. Wealth is created in stocks. It is known to all. But by investing in the shares of the company, People do not know which stock will increase and which will decrease. Everyone gets confused on this matter.
People say invest in a big company, but we experienced there is no growth in it. And when we go out to invest in a small company, it is a lot of risks. And there are some companies whose products are good; business models are good. But the share price has been lying in the same place for 10 years.
I read a lot of books to categorize shares, when I searched for answers I got a small-cap, large-cap, and mid-cap. All these were categorized by market cap. But for me, this type of category was wanted for Return, Reward, Growth, and Defensive. There were similar types of stocks in every market cap that I wanted differently.
I saw some experts saying on TV, “A” group shares, ‘’B” group shares. So I also read these types of categories very carefully, even though these ones did not work for me. So, I decided to read all the good books related to the stock market. and what I found the best book. Once upon wall street. Believe me, I got answers to all the questions when I read this book in early 2012, which I am going to share with you.
As per the book, 6 types of stocks are there. And all those stocks are growing as per their categories. If you are an existing investor or a beginner investor you must know to identify those stocks. So, you can make the ideal portfolio and get better growth in the future. Here are the 6 categories of share I mention below.
Slow Growers
All the big stocks come in this category, and if the sector is seen, most of the stocks belong to FMCG, Pharma, IT, and large-cap stocks. Here companies are so strong but their growth rate is very low like 5% to 9%. These stocks move with economic speed.
And yes, here you get a good dividend from the company. Therefore, this kind of stock is called income stock. Generally, old people like to invest in this kind of company, so that they can enjoy their income in the last period. Here you can get safety but not growth. Here the author does not like to invest in this kind of stock.
Stalwarts
It is a company that is almost large-cap, but the potential to grow further and more in them is still there. In a country like India, this company gives growth of about 15% to 20%.
According to the safety and growth, this is the company that is the favourite of maximum fund managers and institutions. I like to recommend this kind of stock to beginner investors.
Fast growers
This is the stock author is always looking for. Here the stocks are not giving you a return in percentage. Stocks are grown in folds multiple times. In the stock market world, we call these companies multi-bagger. Our author returns of 29.2% were being made every year due to these stocks.
Here the opportunity to make good wealth in the stock market. The author searches these stocks always and buys them when the company is in the earlier stage. Used to keep it on hold for many years. Here you found little risk but growth potential. Most of the fund managers are always in search of these kinds of stocks.
Cyclic stocks
The cyclic stock moves up and down according to the business cycle. If the economy is good, then this stock gives great performance, but if the economy falls, then both their revenue and stock price fall. If we take an example then the automobile sector comes under this.
I suggest to beginners to avoid this category of stocks. Most of the new investors come in the bull market. In the bull market, these stocks are traded at high value and price. No one buys this company’s product during the time of resection.
Turn around
The stocks of this category are passing through rough conditions. Just like Yes bank. But if they get a good opportunity, they can grow like anyone else. If not then this company ends. Also, I do not recommend investing in this kind of stock.
Asset plays
Warren Buffet and Benjamin graham like this kind of stock. These are companies that have significant assets but the market is not considering them.
sometimes in case, real assets, or inventory. Benjamin Graham considers this kind of company as a value investment. He used to say buying dollars for 50 cents.
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