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What are Stocks?
A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called "shares" which entitles the owner to a proportion of the corporation's assets and profits equal to how much stock they own.

Stocks are bought and sold predominantly on stock exchanges and are the foundation of many individual investors' portfolios. Stock trades have to conform to government regulations meant to protect investors from fraudulent practices.
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What are Value Stocks?
Value stocks are undervalued by the market and offer lower prices relative to earnings, assets, or fundamentals. Investors in value stocks attempt to capitalize on market inefficiencies, since the underlying equity price may not match the company’s performance.

Common characteristics of value stocks include high dividend yield, a low price-to-book ratio (P/B ratio), and a low price-to-earnings ratio (P/E ratio).

For all their potential upsides, value stocks are considered riskier than growth stocks because of the market's skeptical attitude toward them. For a value stock to turn profitable, the market must alter its perception of the company, which is considered riskier than a growth entity developing. For this reason, a value stock is typically more likely to have a higher long-term return than a growth stock because of the underlying risk.
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What are Dividend Stocks?
Dividend stocks are stocks of those companies that pay regular dividends to shareholders. A dividend is the distribution of a company's earnings to its shareholders and is determined by the company's board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock. Dividend stocks provide steady income and the potential for capital appreciation.

The dividend yield is the dividend per share and is expressed as dividend/price as a percentage of a company's share price.

Common shareholders of dividend-paying companies are eligible to receive a distribution as long as they own the stock before the ex-dividend date.
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What are Growth Stocks?
Growth stocks are for companies that reinvest earnings for future growth. These companies prioritise expansion, improvement, and acquisition over dividends. They often have higher price-to-earnings ratios and offer potential for capital appreciation.

Some characteristics of Growth Stocks are:

  • High growth rate: growth stocks tend to show a significantly higher growth rate than the average market growth rate.
  • Low or zero dividends: growth stocks usually pay either low dividends or zero dividends at all. It is because they typically want to reinvest their retained earnings back into the company to boost the revenue-generating capacity of the business.
  • Competitive advantage: growth companies usually demonstrate a significantly higher growth rate because they tend to possess some kind of competitive advantage over other companies in the same industry.
  • Loyal consumer base: growth companies tend to enjoy a loyal, growing consumer base. The USP that such companies enjoy over their competitors ensures a constantly growing consumer base.
  • Revenue: in the long term, investors are able to generate substantial revenues through capital gains, after seeing growth companies experience two-fold, three-fold, or multi-fold growth over the years.
  • Risk factor: while growth stocks are a very attractive investment option and can generate substantial profits in the long term, the level of uncertainty surrounding them in the short term contributes to a high risk factor.
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What is Fundamental Analysis?
Fundamental analysis evaluates a company's financial and economic health to determine investment potential. It uses financial ratios to gain a complete picture of the company's performance and position. By combining these ratios, investors can make informed investment decisions.

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What is Benchmarking?
Benchmarking compares a company's performance to a standard or benchmark, such as an industry average or peer group, to assess relative performance. It helps identify areas for improvement, measure progress, and make informed decisions about future strategies and investments. In finance and investing, benchmarking compares a portfolio or fund's performance to a benchmark index, like the KSE100, to assess performance relative to the market.

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What are the different categories of ratios?
The five main categories of ratios used in the fundamental analysis are: liquidity ratios, solvency ratios, profitability ratios, valuation ratios, and activity ratios. Each category provides important information about a company's financial performance and position, and helps investors make informed investment decisions.

  • Liquidity Ratios: Show a company's ability to pay short-term obligations.
  • Solvency Ratios: Show a company's ability to pay long-term obligations.
  • Profitability Ratios: Show a company's ability to generate profits.
  • Valuation Ratios: Help determine if a stock is overvalued or undervalued.
  • Activity Ratios: Measure a company's efficiency in using assets to generate sales and profits.
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What is Market Value of Equity?
A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called "shares" which entitles the owner to a proportion of the corporation's assets and profits equal to how much stock they own.

Stocks are bought and sold predominantly on stock exchanges and are the foundation of many individual investors' portfolios. Stock trades have to conform to government regulations meant to protect investors from fraudulent practices.

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Standard Capital Securities educates clients on investing fundamentals. We believe informed investors are confident investors. Our goal is to help you understand risk vs reward, diversification, and much more. 

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Basics of Investing in Equity

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What are Stocks?

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What are Value Stocks?

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What are Dividend Stocks?

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What are Growth Stocks?

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Standard Capital Securities offers a free online course and live webinar trainings on investing for all. Sign up now to start your investing journey on the right foot.

Our free online course covers investing fundamentals such as risk vs reward, diversification, and Technical Analysis. Engaging video lessons and interactive quizzes allow you to learn at your pace and schedule.

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Basics of Investing in Equity

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What is Fundamental Analysis?

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What is Benchmarking?

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What are the different categories of ratios?

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What is Market Value of Equity

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