Glossary
Stock market terms explained in plain English. 31 terms and counting.
52-Week High/Low
The highest and lowest prices a stock has traded at over the past year. Gives you context for where the current price sits relative to its recent range.
Analyst Rating
A recommendation from a Wall Street analyst, usually Buy, Hold, or Sell. Based on professional research, but skews positive due to industry incentives. Use as one input, not a directive.
Bear Market
A market decline of 20% or more from recent highs. Named after how a bear swipes downward. Bear markets are painful but historically temporary.
Beta
Measures how much a stock moves relative to the overall market. A beta of 1.0 means it moves in line with the market. Above 1.0 means more volatile, below 1.0 means less.
Blue Chip
A large, well-established company with a long track record of stable earnings. Think Apple, Johnson & Johnson, or Coca-Cola. The name comes from poker, where blue chips are the most valuable.
Bull Market
A sustained period of rising stock prices, generally defined as a 20% increase from recent lows. Named after how a bull charges upward.
Buyback
When a company purchases its own shares from the open market. This reduces the number of shares outstanding, which can increase earnings per share and signal that management thinks the stock is undervalued.
Conviction Score
A proprietary 0-to-100 rating on ConvictionStocks that combines valuation, growth, analyst consensus, momentum, and sentiment into a single number. Not a buy or sell signal. A data-driven starting point for your research.
Debt-to-Equity Ratio
Compares a company's total debt to its shareholders' equity. A ratio above 2.0 means the company has more than twice as much debt as equity, which can be risky. Lower is generally safer, but some industries (like utilities) naturally carry more debt.
Dividend
A cash payment made by a company to its shareholders, usually quarterly. Not all companies pay dividends. Those that do are often mature, profitable businesses sharing profits with investors.
Dividend Yield
The annual dividend payment divided by the stock price, expressed as a percentage. A stock priced at $100 that pays $3/year in dividends has a 3% yield. Higher yield means more income, but extremely high yields can signal trouble.
EPS (Earnings Per Share)
A company's total profit divided by the number of shares outstanding. If a company earned $1 billion and has 500 million shares, EPS is $2.00. Rising EPS over time is a strong positive signal.
ETF (Exchange-Traded Fund)
A basket of stocks, bonds, or other assets that trades on an exchange like a single stock. ETFs let you buy exposure to an entire sector, index, or strategy in one trade. Popular examples: SPY (S&P 500), QQQ (Nasdaq 100).
Float
The number of shares available for public trading. A low float means fewer shares are available, which can lead to bigger price swings on high volume.
Free Cash Flow
The cash a company generates from operations after subtracting capital expenditures. This is the real money available to pay dividends, buy back shares, reduce debt, or invest in growth. More reliable than net income because it's harder to manipulate.
Growth Stock
A company expected to grow revenue and earnings faster than the market average. Growth stocks typically have higher P/E ratios and reinvest profits rather than paying dividends. Think NVIDIA, Tesla, or Amazon in their high-growth phases.
Index Fund
A fund that tracks a specific market index, like the S&P 500. Instead of picking individual stocks, you own a slice of the entire index. Low fees, broad diversification, and historically solid long-term returns.
IPO (Initial Public Offering)
When a private company sells shares to the public for the first time. IPOs generate excitement but can be volatile. The stock often trades at inflated prices early on before settling to its true value.
MACD
Moving Average Convergence Divergence. A technical indicator that shows the relationship between two moving averages of a stock's price. Traders use it to spot potential buy and sell signals. When the MACD line crosses above the signal line, it's considered bullish.
Market Cap (Market Capitalization)
The total value of all a company's outstanding shares. Calculated by multiplying the stock price by the number of shares. A $100 stock with 1 billion shares has a $100 billion market cap. Tells you how big the company is.
Moving Average
The average stock price over a specific period (like 50 days or 200 days). Smooths out daily price noise to show the overall trend. A stock trading above its 200-day moving average is generally considered to be in an uptrend.
Net Income
A company's total profit after all expenses, taxes, and costs are subtracted from revenue. Also called the "bottom line." Positive and growing net income is what you want to see.
P/E Ratio (Price-to-Earnings)
The stock price divided by earnings per share. Tells you how much you're paying for each dollar of earnings. A P/E of 20 means investors pay $20 for every $1 of earnings. Compare within the same industry, not across sectors.
Price Target
An analyst's estimate of where a stock's price will be in 12 months. The consensus price target is the average across all analysts covering the stock. Useful as a reference point, but predictions are frequently wrong.
Profit Margin
The percentage of revenue that becomes profit. A 25% profit margin means the company keeps $0.25 of every dollar it earns. Higher margins generally indicate a stronger competitive position and pricing power.
Revenue
The total money a company brings in from selling its products or services before any expenses. Also called the "top line." Revenue growth is one of the most important indicators of a healthy business.
RSI (Relative Strength Index)
A momentum indicator that measures the speed and magnitude of recent price changes on a scale of 0 to 100. Above 70 is considered "overbought" (possibly due for a pullback). Below 30 is "oversold" (possibly due for a bounce).
Short Interest
The number of shares that have been sold short (betting the price will drop). High short interest means many investors expect the stock to decline. If the stock rises instead, short sellers may be forced to buy back shares, causing a "short squeeze."
Stock Split
When a company divides its existing shares into more shares. A 2-for-1 split means you get two shares for every one you owned, but each share is worth half as much. The total value doesn't change. Companies split stocks to make shares more affordable.
Value Stock
A company trading at a price below what its fundamentals suggest it's worth. Value stocks tend to have lower P/E ratios and often pay dividends. Think banks, utilities, or consumer staples companies that are out of favor but still profitable.
Volume
The number of shares traded during a given period. High volume means lots of buying and selling activity. Significant price moves on high volume are more meaningful than moves on low volume.
31 terms