{"id":1115615,"date":"2021-12-10T12:47:50","date_gmt":"2021-12-10T17:47:50","guid":{"rendered":"https:\/\/www.fool.ca\/?page_id=1115615"},"modified":"2023-06-03T13:19:01","modified_gmt":"2023-06-03T17:19:01","slug":"types-of-stocks-in-canada","status":"publish","type":"page","link":"https:\/\/www.fool.ca\/investing\/types-of-stocks-in-canada\/","title":{"rendered":"Types of Stocks in Canada"},"content":{"rendered":"\n

\u00adInvesting in the stock market has historically been one of the most significant ways to build wealth over the long-term. As you begin to research different stocks, you\u2019ll inevitably come across concepts like \u201cdiversification\u201d and \u201casset allocation,\u201d both of which encourage you to spread your investment dollars across numerous industries and markets.<\/p>\n\n\n\n

Part of learning how to diversify wisely is learning the different types of stocks, each of which comes with varying levels of risk and reward. Though on a basic level, stocks come in two types, common and preferred, on a much deeper level they can be separated into 21 different categories: <\/p>\n\n\n\n

1. Common stock <\/h2>\n\n\n\n

When you hear investors talking about stocks, they\u2019re most likely talking about \u201ccommon stock.\u201d Common stock represents partial ownership in a company. As a common stockholder, you get certain voting privileges, as well as a claim on some of the company\u2019s profits (if they pay out dividends). <\/p>\n\n\n\n

With common stock, you have unlimited upside potential, as stock values theoretically have no ceilings. On the flip side, if a company goes bankrupt and liquidates, you risk losing your entire investment. Any money the company has will go to creditors, bondholders, and preferred stockholders first. Once those three groups are paid off, you might receive something for your shares, though, more often than not, your shares will become worthless. <\/p>\n\n\n\n

But that\u2019s only in the extreme example of bankruptcy and liquidation. More likely, the value of your common stocks will go up and down, following the company\u2019s performance and assets, trends in the stock market, and investor demand. <\/p>\n\n\n\n

Because the upside is unlimited, the value of common stocks have the potential to double or triple, sometimes doing so several times over long periods of time. For this reason, common stocks are better for investors who are looking for long-term growth, rather than generating income now. <\/p>\n\n\n\n

2. Preferred stock <\/h2>\n\n\n\n

Preferred stock works differently than common stock. It doesn\u2019t represent partial ownership in a company, meaning you don\u2019t have voting rights, and the value of your preferred stock doesn\u2019t appreciate as the company becomes more profitable and grows. <\/p>\n\n\n\n

Rather, preferred stocks<\/a> are a form of fixed-income security. They entitle shareholders to a set dividend payment, which the companies then pay out at regular intervals. Dividends on preferred stocks are usually higher than those on common stocks, and, in the event of a bankruptcy or a tough financial time, preferred stockholders will receive their payout before common stockholders. Hence the \u201cpreferred\u201d in the title.  <\/p>\n\n\n\n

Preferred stocks are great for investors who want to generate income, not growth. The yield on a preferred stock could change overtime, usually in response to a change in the benchmark interest rate. Unlike common stocks, however, the value of your preferred stock won\u2019t grow substantially over time. <\/p>\n\n\n\n

3. Large-cap stocks <\/h2>\n\n\n\n

Large-cap stocks<\/a> are companies with market capitalizations of $10 billion or more. Recall that market capitalization refers to the total value of a company\u2019s stock. For instance, if a company has 30 million outstanding shares, with each one worth $100, then we\u2019d say that company has a market cap of $30 billion (30 million x $100), and we would consider it a large-cap stock. <\/p>\n\n\n\n

Large-cap stocks are typically leaders in their respective industries. They\u2019re often companies with household names, and they typically pay out dividends, too. Because of their size, large-caps are considered safer investments, as it\u2019s unlikely the company\u2019s stock value will tank considerably. With added security, however, comes a limited upside, as many large-caps have reached a point where they won\u2019t grow exponentially. <\/p>\n\n\n\n

Top large-cap stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Royal Bank of Canada (TSX:RY<\/a>)<\/td>The largest bank in Canada by market cap.<\/td><\/tr>
Toronto-Dominion Bank (TSX:TD<\/a>)<\/td>Largest Canadian bank by assets ($1.73 trillion)<\/td><\/tr>
Enbridge Inc. (TSX:ENB<\/a>)      <\/td>North America\u2019s largest natural gas utility with the world\u2019s longest crude oil transportation system (17,809 miles).<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

4. Mid-cap stocks <\/strong><\/h2>\n\n\n\n

Mid-cap stocks are companies with a market cap between $2 and $10 billion. Because they\u2019re smaller than large-caps, mid-caps have more potential for growth. At the same time, they could be riskier, as they don\u2019t have the same capital investment as large caps to fall back on. <\/p>\n\n\n\n

Many mid-caps are growing companies that continue to push out exciting products and innovative research. Some, however, are former large-caps that have fallen back into the mid-cap range. Others, on the other hand, are leaders in their respective markets, but their markets are so small, they\u2019re struggling to grow any bigger. <\/p>\n\n\n\n

Top mid-cap stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
West Fraser Timber Co.  (TSX:WFG<\/a>)  <\/td>Major producer of diversified wood products in Canada.<\/td><\/tr>
Descartes Systems Group  (TSX:DSG<\/a>)  <\/td>Software developer that helps companies with supply chain management.<\/td><\/tr>
Air Canada (TSX:AC<\/a>)  <\/td>Canada\u2019s largest airline and founding member of Star Alliance.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

5. Small-cap stocks <\/strong><\/h2>\n\n\n\n

Small-cap stocks <\/a>are companies with a market capitalization between $300 million and $2 billion. Small-caps are often young startups with a potential for growth but less stability than mid-caps and large-caps. <\/p>\n\n\n\n

Because of their size, small-caps are often more volatile than larger stocks. That\u2019s not always a bad thing, as small-caps have the potential to explode in value. Of course, for every small-cap that becomes a success, there are hundreds that don\u2019t. If a small-cap can\u2019t lift off the ground, it could easily fail, making them more risky than large, more stable stocks. <\/p>\n\n\n\n

On the flip side, several small-caps end up becoming the stocks investors wished they had invested in when they were small. For investors who have a longer investment horizon and want more upward growth, small-caps could become a lucrative opportunity. <\/p>\n\n\n\n

Top small-cap stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
goeasy (TSX:GSY<\/a>)  <\/td>Financial company that offers non-prime leasing and lending services.<\/td><\/tr>
Birchcliff Energy (TSX: BIR<\/a>)    <\/td>Gas company that develops natural gas.<\/td><\/tr>
Dream Office REIT (TSX:D.UN<\/a>)    <\/td>Real estate investment trust that develops suburban offices.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

6. Microcap stocks <\/strong><\/h2>\n\n\n\n

Microcap stocks<\/a> are even smaller than small-caps. By definition, a microcap stock is a company with a market capitalization between $50 and $300 million. <\/p>\n\n\n\n

Like small caps, microcaps are typically young startups that haven\u2019t caught the attention of the larger market. They\u2019re usually in an aggressive growth stage, reinvesting their shareholder\u2019s dollars in company expansion and research development.<\/p>\n\n\n\n

Because of their size, microcaps typically don\u2019t trade on a stock exchange, like the TSX. Instead, you usually have to buy them \u201cover-the-counter,\u201d on the OTC Bulletin Board (OTCBB) or through pink sheets. <\/p>\n\n\n\n

Because they don\u2019t trade on a stock exchange, microcaps may have less liquidity than stocks with larger market caps. In other words, you might have more difficulty trading your microcaps than other types of stocks.<\/p>\n\n\n\n

Likewise, companies on pink sheets don\u2019t always reveal information about their finances, as regulation is much looser than on a stock exchange. That, in addition to their small size, can make microcaps a risky investment. <\/p>\n\n\n\n

Despite their risks, microcaps could bring you hefty gains. If you can find great microcap companies, you can get in the door before the company takes off. <\/p>\n\n\n\n

7. Mega-cap stocks <\/strong><\/h2>\n\n\n\n

Mega-caps are companies that have market capitalizations of $200 billion or higher. Like large-caps, megacaps offer more stability rather than immense growth potential. They can be great for investors who are nearing retirement, who don\u2019t want to take on the risks of micro- to mid-cap stocks, or who want to stabilize a portfolio of more volatile investments. <\/p>\n\n\n\n

Only a dozen or so companies have reached this exclusive status, and none reside in Canada. For examples of mega-stocks, you\u2019ll have to look south of the border: Amazon<\/a>, Apple, Coca-Cola, Johnson & Johnson, and Verizon.<\/p>\n\n\n\n

8. Domestic stocks<\/strong><\/h2>\n\n\n\n

Domestic stocks<\/a> are Canadian companies that trade on our exchanges, such as the TSX. Domestic stocks are typically headquartered in Canada, and you\u2019ll always see their share price in Canadian dollars.<\/p>\n\n\n\n

For beginning investors, domestic stocks are a good place to start, as you\u2019re probably more familiar with Canadian companies than with international ones. <\/p>\n\n\n\n

Top domestic stocks: <\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Brookfield Asset Management (TSX:BAM.A)<\/td>Global asset manger with $725 billion of assets.<\/td><\/tr>
Thomson Reuters Corporation  (TSX:TRI<\/a>)  <\/td>Leading news source and provider of accounting software.  <\/td><\/tr>
Shopify (TSX:SHOP<\/a>)  <\/td>Provider of an e-commerce platform to small and midsized businesses.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

9. International stocks <\/strong><\/h2>\n\n\n\n

International stocks<\/a>, or foreign stocks, are stocks that trade on exchanges outside of Canada. International stocks are slightly more risky than domestic stocks, as they might require you to research and learn about foreign markets.<\/p>\n\n\n\n

That said, international stocks can help you achieve greater diversification, especially since Canada\u2019s market is only about 3% to 4% of the total world market. <\/p>\n\n\n\n

Top international stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Alphabet (GOOG)<\/td>American holding company that includes Google.<\/td><\/tr>
Amazon (AMZN)    <\/td>The world\u2019s largest online retailer and a large cloud service provider.<\/td><\/tr>
StoneCo (STNE)    <\/td>Provider of financial services in Brazil.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

10. Growth stocks <\/strong><\/h2>\n\n\n\n

Growth stocks<\/a> are companies that are expected to grow their revenues or profits at a faster-than-average pace. Growth stocks may have a savvy leadership, an explosive business model, or an innovation that looks to disrupt a larger market. Often they\u2019re on the cusp of some larger trend, such as an advance in technology or a change in consumer behavior. <\/p>\n\n\n\n

Because they\u2019re often small to mid-sized companies with a sizable market opportunity, growth stocks offer investors an opportunity to earn big returns.<\/p>\n\n\n\n

Of course, growth stocks have their risks, too, including an overinflated share price that bursts when the company doesn\u2019t deliver on its promises. But if you\u2019re okay with large price fluctuations and more risk, growth stock investing could be for you. <\/p>\n\n\n\n

Top growth stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Docebo (TSX:DCBO<\/a>)  <\/td>Cloud-based learning platform.<\/td><\/tr>
Lightspeed POS (TSX:LSPD<\/a>)<\/td>SaaS software that helps retailers manage customer and inventory data.<\/td><\/tr>
Dye & Durham (TSX:DND<\/a>)<\/td>Provider of cloud-based software and technology, specifically for legal and business professionals.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

11. Value stocks <\/strong><\/h2>\n\n\n\n

Value stocks<\/a> are companies that are trading for less than they\u2019re truly worth. These companies could have had a bad quarterly report, or a temporary price cut due to a market correction. Either way, their share price is below their actual value, which makes them seem like a \u201cdiscount\u201d to perceptive investors. <\/p>\n\n\n\n

Unlike growth stocks, which are usually new companies looking to grow, value stocks are typically larger, more-established companies that have slowed down. They have relatively stable revenues, steady growth rates, and they typically pay out dividends, too. <\/p>\n\n\n\n

To find value stocks, investors often use valuation metrics, such P\/E ratios and P\/S ratios. This helps investors see if the underlying company has more intrinsic value than the share price suggests.  <\/p>\n\n\n\n

Top value stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Shopify (TSX:SHOP<\/a>)<\/td>E-commerce company that helps businesses create online platforms.<\/td><\/tr>
CIBC (TSX:CM<\/a>)  <\/td>Fifth largest bank in Canada.<\/td><\/tr>
Constellation Software (TSX:CSU<\/a>)   <\/td>Company that develops software for public and private businesses.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

12. IPO stocks <\/strong><\/h2>\n\n\n\n

Recall that an IPO, or \u201cinitial public offer,\u201d is when a private company goes public and begins to sell shares to investors. An IPO stock<\/a>, then, is simply an opportunity to get in on the ground floor and invest in a company whose stock shares are brand-new. <\/p>\n\n\n\n

IPO stocks come in two types, those that are sold beforethe IPO happens and those that are sold after. <\/p>\n\n\n\n

Those that are sold before the IPO happens are fairly exclusive. Often, your broker will need to have access to the stock, and if they don\u2019t, you might be out of luck. If they do have access, you typically have to meet specific requirements, such as having a certain amount of money in your brokerage account or trading stocks a certain number of times per year. <\/p>\n\n\n\n

If you can\u2019t get a stock before the company\u2019s IPO, you can always wait until the stock is available on an exchange. It might be better to wait, as you can see how the stock value holds up in the weeks and months after the IPO. <\/p>\n\n\n\n

IPO stocks could present you with a lucrative opportunity to get in on the ground floor before a company explodes. But proceed with caution. Always evaluate the company before you buy its stock, and be wary of \u201cinvestor hype,\u201d as overzealous excitement can easily overinflate a company\u2019s initial share price.<\/p>\n\n\n\n

Recent IPO stocks: <\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
DefinityFinancial (TSX:DFY<\/a>)<\/td>Property and casualty insurance company.<\/td><\/tr>
H20 Innovation Inc (TSXV:HEO<\/a>)<\/td>Water company that uses innovate technology to provide drinking water and clean wastewaters.<\/td><\/tr>
Valeo Pharma Inc. (TSE:VPH)  <\/td>Pharmaceutical company dedicated to innovative prescriptions.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

13. Dividend stocks <\/strong><\/h2>\n\n\n\n

Dividend stocks<\/a> are stocks that pay out a portion of the company\u2019s profits to shareholders. These payouts are usually cash, but sometimes they can be distributed in the form of shares in the company\u2019s stock. Dividends are paid out periodically\u2014annually, semi-annually, quarterly, or monthly\u2014and occasionally companies will increase their dividends.<\/p>\n\n\n\n

RELATED:<\/strong> Top Canadian Monthly Dividend Stocks<\/a><\/p>\n\n\n\n

Top dividend stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Enbridge (TSX:ENB<\/a>)<\/td>Midstream oil company with a n annual dividend yield of 6.45%.<\/td><\/tr>
TransAlta Renewables Inc. (RNW:CA)<\/td>Renewable energy company with an annual dividend yield of 5.59%<\/td><\/tr>
CIBC (CM:CA)  <\/td>The fifth largest bank in Canada with an annual dividend yield of 5.70%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

14. Non-dividend stocks <\/strong><\/h2>\n\n\n\n

A non-dividend stock is simply a stock that doesn\u2019t pay a dividend. Many growth stocks and small-cap companies won\u2019t pay out a dividend, as they typically reinvest profits and investor\u2019s dollars into continued growth. <\/p>\n\n\n\n

Even without the quarterly payout, however, non-dividend stocks can be a strong investment, as the capital appreciation on the stock can far outweigh a quarterly dividend. Even so, many companies that reach a large market capitalization end up paying out dividends to shareholders. <\/p>\n\n\n\n

15. Income stocks <\/strong><\/h2>\n\n\n\n

Income stocks are stocks that reliably pay out a dividend (income stocks are nearly synonymous with dividend stocks). While dividend stocks refer to all companies that pay out a dividend, income stocks are typically reserved for those companies that are well-established, mature, and regularly increase their dividends. <\/p>\n\n\n\n

Investors who are in or near retirement will often buy income stocks to create a passive income strategy. Even if you\u2019re not close to retirement, income stocks could be ideal for investors who want to generate cash now from their investments. <\/p>\n\n\n\n

16. Cyclical stocks <\/strong><\/h2>\n\n\n\n

When you look at the history of a national economy, you\u2019ll see that every economy goes through periods of prosperity, as well as periods of economic slowdowns. Investors call this pattern \u201ccyclicality.\u201d When a stock is heavily affected by these cycles, it\u2019s referred to as a cyclical stock. <\/p>\n\n\n\n

Cyclical stocks<\/a>\u00a0tend to perform exceptionally well during economic booms, while also performing poorly during challenging times. For instance, companies within the discretionary sector<\/a>, such as airlines, hotels, retail stores, restaurants, car manufacturers, and tech companies, typically sell less products and services when money is tight. When times are good, however, these companies tend to perform very well, as people have more money to spend.\u00a0<\/p>\n\n\n\n

Though economic cycles can have a major impact on cyclical stocks, it\u2019s often hard to predict just which companies will perform poorly and which won\u2019t. For instance, the pandemic-induced recession caused bank and manufacturing stocks to decline, though because people started working from home, tech stocks performed fairly well. For that reason, it\u2019s good to diversify your cyclical stocks, spreading your money around different industries. <\/p>\n\n\n\n

Top cyclical stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Suncor Energy (TSX:SU<\/a>)   <\/td>Integrated energy company that develops oil sands as well as sells retail gas through its gas stations, PetroCanada.<\/td><\/tr>
Magna International (TSX:MG<\/a>)<\/td>Major supplier of automotive parts.<\/td><\/tr>
NFI Group (TSX:NFI<\/a>)     <\/td>Canadian automobile manufacturer that\u2019s developing zero-emission vehicles.  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

17. Non-cyclical stocks <\/strong><\/h2>\n\n\n\n

Not every company is susceptible to economic cycles. Some, in fact, are relatively immune to them. We call these \u201cnon-cyclical stocks,\u201d or defense stocks<\/a>, as they tend to perform similarly during both periods of prosperity and recessions. <\/p>\n\n\n\n

Examples of non-cyclical stocks include those in non-discretionary retail, such as grocery stores, drugstores, and wholesale retailers, as well as utility stocks and real estate. <\/p>\n\n\n\n

Top non-cyclical stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Loblaws (TSX:L<\/a>) <\/td>Canada\u2019s largest retailer of groceries, pharmaceuticals, and general merchandising.<\/td><\/tr>
Metro Inc. (TSX:MRU<\/a>)  <\/td>One of Canada\u2019s most popular grocery stores.<\/td><\/tr>
Empire Company Limited (TSX:EMP.A<\/a>)  <\/td>Owner of Sobeys Inc, one of the largest grocery chains in Canada.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

18. Safe stocks <\/strong><\/h2>\n\n\n\n

While no stock is 100% safe from market volatility, some stocks are safer than others. We call these stocks \u201csafe stocks.\u201d <\/p>\n\n\n\n

Safe stocks<\/a> are companies that grow their revenues year after year. They\u2019re often relatively immune to economic cycles, and they have durable competitive advantages that all but concretize their status as an industry leader.<\/p>\n\n\n\n

Because of their size and prestige, they typically have power over their rivals, and often their products and services continue to sell even in recessions. <\/p>\n\n\n\n

Of course, no stock is completely immune to volatility, and safe stocks can lose value during market corrections or recessions. That said, their price movements are typically less jumpy when compared to other types of stocks, such as microcaps, small-caps, and growth stocks. <\/p>\n\n\n\n

Top safe stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Royal Bank of Canada (TSX:RY<\/a>)<\/td>Canada\u2019s largest bank by market cap.<\/td><\/tr>
BCE (TSX:BCE<\/a>)    <\/td>Canada\u2019s largest wireless and internet provider with a heavy hand in developing 5G technology.<\/td><\/tr>
Waste Connections (TSX:WCN<\/a>)<\/td>Third-largest provider of waste and recycling services in North America.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

19. ESG stocks <\/strong><\/h2>\n\n\n\n

ESG investing<\/a> is an ethical approach to investing in which you measure a company\u2019s impact on their environment, community, shareholders, and\u2014 broadly speaking\u2014the world, alongside their financial returns. <\/p>\n\n\n\n

ESG stands for \u201cenvironmental, social, and governance.\u201d The \u201cenvironmental\u201d aspect relates to the company\u2019s carbon footprint, as well as other green principles, such as water conservation, recycling, and proper waste disposal. The \u201csocial\u201d aspect relates to how the company treats employees, shareholders, consumers, suppliers, and other members of the local community. And the \u201cgovernance\u201d aspect looks at the company\u2019s leadership and business ethics. <\/p>\n\n\n\n

ESG investors analyze corporate sustainability reports along with third-party ratings to decide a company\u2019s ESG ranking. Some research suggests that companies with strong ESG principles have lower downside risk and stronger returns than non-ESG counterparts.<\/p>\n\n\n\n

Top ESG stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Brookfield Renewable Partners (BEP.UN:CA)<\/td>Large owner and operator of clean energy assets.<\/td><\/tr>
IGM Financial Inc. (IGM:CA)    <\/td>Canada\u2019s largest asset manager that isn\u2019t affiliated with a bank. It\u2019s ESG rating is 11.7, ranking it 33 out of 920 in diversified financials.<\/td><\/tr>
Innergex Renewable Energy (INE:CA)<\/td>Independent renewable power producer with facilities in Canada, the U.S., France, and Chile.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

20. Blue chip stocks <\/strong><\/h2>\n\n\n\n

Blue chip stocks<\/a> are industry-leading companies with a long tract record of success and a dependable business model. These companies have typically grown so large, they\u2019ve become household names, and there\u2019s little doubt in consumers\u2019 minds that the company will go on operating.<\/p>\n\n\n\n

Like large-caps, blue chips are very stable, with little or no prospect of explosive growth. Unlike large-caps, however, which are defined by their market capitalization, blue-chips aren\u2019t defined by any quantifiable metrics. Instead, they\u2019re defined by more subjective characteristics, such as reputation, brand recognition, and popularity. <\/p>\n\n\n\n

Because of their size, blue-chips are a fairly safe investment. Many have a history of paying out dividends, too, with those dividends increasing regularly. That said, because blue-chip stocks have reached a place of stability, they don\u2019t offer as much growth potential as small- and mid-caps.<\/p>\n\n\n\n

Top blue chip stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Royal Bank of Canada (TSX:RY<\/a>)  <\/td>Canada\u2019s largest bank by market cap.<\/td><\/tr>
Fortis (TSX:FTS<\/a>)  <\/td>Major gas and electric utilities companies.<\/td><\/tr>
Canadian Tire (TSX:CTC.A<\/a>)<\/td>Canada\u2019s largest and most recognized retail store.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

21. Penny stocks <\/strong><\/h2>\n\n\n\n

Penny stocks<\/a> are small companies whose stocks trade for $5 or less per share. Like microcaps and small-caps, penny stock companies are usually small start-ups with no track history of success. Unlike microcaps and small-caps, however, penny stocks typically don\u2019t have a long-term prospect for growth. They\u2019re priced cheap, and, in this case, their price reflects the company. <\/p>\n\n\n\n

If their companies are so bad, why do people invest in penny stocks? Most of the time, penny stock investors aren\u2019t looking for long-term growth. They buy large quantities of penny stocks, hoping that the share prices increase even by a few cents. If they do, these investors can earn some quick gains, as long as they sell the stocks in time. <\/p>\n\n\n\n

For any investor, not just beginners, penny stocks are an extremely risky venture. Be sure you understand their risks before you start trading them. Even so, the other 20 types of stocks listed above will most likely offer you a better opportunity for your investment dollars. <\/p>\n\n\n\n

Top penny stocks:<\/h3>\n\n\n\n
Company<\/strong><\/td>Description<\/strong><\/td><\/tr>
Hive Blockchain Technologies (TSX:HIVE)<\/td>A cryptocurrency mining firm and the first crypto miner to go public. <\/td><\/tr>
Poet Technologies (TSXV:PTK<\/a>)<\/td>Semiconductor company pioneering chips with electronic and photonic capabilities.<\/td><\/tr>
good natured Products Inc (TSXV:GDNP)   <\/td>Developer and producer of durable and ecologically friendly plastic containers.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

<\/div><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00adInvesting in the stock market has historically been one of the most significant ways to build wealth over the long-term. As 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