Common stock
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  • 1. Deepika Verma Shikha Agrawal Mr. Sujeet Pandit Presented By:- Prachi Tiwari
  • 2. Why common stock called Variable income securities? 2
  • 3. Common Stock  Securities that represent equity ownership  Its also give the holder a share in a company's profits via dividend payments or the capital appreciation of the security  Common stockholders have junior status to the claims of secured/unsecured creditors, bondholders and preferred shareholders in the event of a company's liquidation  Common stock has lower priority in event of liquidation than preferred shares 3
  • 4. Characteristics of Common Stock  the right to receive dividend payments typically from earnings -- if authorized by the board of directors  the power to sell the stock (liquidity rights) and realize capital gains on public trading markets or in private transactions-- if there are willing buyers  the right to receive consideration in a merger or other fundamental transaction -- if approved by the board and the shareholders  the right to vote to elect directors and to Common stock represents a bundle of rights and powers. They include: 4
  • 5. Types of common stock Blue-chip Shares Growth Shares Income Shares Cyclical Shares Defensive Shares Speculative Shares Slow Growers Stalwarts Fast Growers Cyclical Turnarounds Assets Plays 5
  • 6. Classification of Equity Shares 6
  • 7. Shares of large, well-established, and financially strong companies with an impressive record of earnings and dividends. Shares of companies that have a fairly entrenched positions in a growing market and which enjoy an above average rate of growth as well as profitability. 7
  • 8. Shares of companies that have fairly stable operations, relatively limited growth opportunities, and high dividend payout ratios. Shares of companies that have a pronounced cyclicality in their operations. 8
  • 9. Shares of companies that are relatively unaffected by the ups and downs in general business conditions. Shares that tend to fluctuate widely because there is a lot of speculative trending in them. 9
  • 10. 10
  • 11. Large and ageing companies that are excepted to grow slightly faster than the gross national products. Giant companies that are faster than slow growers but are not agile climbers. 11
  • 12. Small, aggressive new enterprises that grow at 10 to 25 % a year. Companies whose sales and profit rise and fall in a regular, through not completely predictable, fashion. 12
  • 13. Companies which are steeped in accumulated losses but which show signs of recovery. Turnarounds company have the potential to make up lost ground quickly. Companies that have valuable assets which have been somewhat overlooked by the stock market. 13
  • 14. 14