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How do I Choose the Best Company Shares?

By Dana DeCecco
Updated May 17, 2024
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Investment objectives vary among individual investors. Company shares might be acquired for different reasons, such as generating income or speculating on the growth of a company. Your personal objective will determine the selection of the best company shares for investment.

The investor might be interested in creating a monthly income. Speculation on company growth might be the main objective. Short-term trading of price fluctuations are another reason for buying stocks. All of these objectives require the purchase of a different kind of stock or company share.

Income-producing company shares can be acquired through an online brokerage firm or a local stock broker. Online discount brokers are the low-cost alternative. Many online brokers supply lists of stocks that pay dividends. These kinds of company shares might pay dividends on a monthly, quarterly or annual basis.

Companies looking forward to future growth offer company shares known as growth stocks. These stocks usually do not pay dividends. Profits are reinvested in an effort to grow at an accelerated pace. Online publications and various software programs rate stocks in a number of categories.

Speculative stocks are often traded for short-term gain. Company shares with a high beta coefficient are preferred trading assets. Beta measures the assets' statistical variance from the market in general. A beta coefficient of 1 means that the stock keeps pace equally with the market, and a beta of 2 means that the stock is twice as volatile as the market. These values are theoretical in nature.

Penny stocks are popular with investors trading smaller accounts. Penny stocks are extremely speculative. Many of these company shares are traded over the counter because the companies have not met the exchange requirements. Money can be made or lost quickly by trading penny stocks.

Value stocks are companies that might have good earnings potential and growth potential but are underpriced because of other factors. Investors who buy these company shares anticipate future growth in the company. The reason could be recent interest in their product or service, new management or recent growth in that particular industry.

Company shares are further classified into sectors and industries. Many investors track the performance of certain industries and invest in companies within the industry. Many of these industries are cyclical in nature and are expected to outperform the market during certain times of the year.

Blue-chip stocks are well-established companies that have good track records. Many investors prefer the safety of these company shares. For each type of investment objective, the market offers a corresponding financial asset.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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