Industry-Type Stock

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Industry-Type Stock

These stocks are worth noting:

Defensive stocks

Defensive stocks are those whose prices stay stable when the market declines; some even grow. Industries that naturally do 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 stocks that 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 as the market fluctuates 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 are the stocks of gold mining, exploration, and production companies. Their value moves up or down with the price of gold.

Treasury stock

Treasury stock is stock that has been bought back by the company that issued it. Companies may buy their stock back from investors because they believe it is underpriced on the market, want 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.