Stock Update: OTC Investors Zero in on ERICSSON LM TELEPHONE CLASS B (ERIXF)

Shares of the OTC stock ERICSSON LM TELEPHONE CLASS B (ERIXF) moved  0.03, reaching $5.48 following recent trading, drawing interest from OTC traders. 

Companies are ranked according to their market caps, falling into large-cap, mid-cap and small-cap categories.  ERICSSON LM TELEPHONE CLASS B (ERIXF)’s market cap is $16730000000.

Large-cap companies have a market cap north of $10 billion.  These large companies have usually been in business for a long time, and are major participants in well-established sectors.  Investors in large-cap companies don’t necessarily bank large returns in short time periods, though are rewarded with a constant increase in share value over the long run.

Mid-cap companies have a market cap of $2 billion – $10 billion.  Mid-cap companies are usually established companies operating in an industry that is expected to experience quick growth.  Mid-cap companies are usually in the middle of expansion.  They carry higher risk than large-cap companies due to the fact that they are not as established, though their growth potential remains an attraction to investors. 

Small-cap companies have a market cap of $300 million – $2 billion.  These smaller companies are usually newer or perhaps service a niche market or a new industry.  Generally considered to be a higher risk than mid or large-cap in part because of their age, their size and the markets they serve.  Small-cap companies usually have fewer resources and are more sensitive to the ebb-and-flow of markets.

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ERICSSON LM TELEPHONE CLASS B’s stock has performed at $16.84 month over month. Short interest stands at 5644700 with 38.2 days to cover, compared to 4831000 short interest last month.

Over-the-counter (OTC) stocks are not listed on the major stock exchanges like the New York Stock Exchange (NYSE).  These securities are typically acquired online through a discount broker, due to the lack of a major exchange listing. 

OTC stocks are considered to be a riskier investment than other securities due to the fact that they have been removed (de-listed) from a major exchange, or otherwise do not qualify for any of the major exchanges.  Bid and ask prices can be found on the OTC Bulletin Board (OTCBB) and/or the “Pink Sheets”.  Ask prices are simply the amount that the stockholder wants to receive.  Bid prices, on the other hand, are the offered price of investors.  OTC sellers can accept, refuse or suggest a new ask price.

Another challenge facing investors is that OTC stocks can be difficult to research, as much less statistical data is usually published.  These companies are typically smaller in size or have experienced some recent issues or problems.  Cautious investors will need to research using valid reference tools, such as the OTC Research Corporation to find projections, operational results, and expert opinions on the stability and reliability of OTC stocks and the companies that are behind them.

OTC stocks can be purchased online, but caution and care should be exercised.  Many brokers who offer OTC stocks follow the pricing and operating results with less diligence than they do for big ticket stock exchange-listed securities.  OTC stocks are referred to as “thinly traded” securities due to the sheer lack the volume compared to the NYSE or some other major exchange stocks.  However, they can still be bought online.

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Due to the lack of information regarding OTC stocks, caution and care should be taken before purchasing these securities.  Only brokers that own and specialize in OTC stocks should be utilized, as they are more familiar with the differences between OTC stocks and the major listed securities.  Investors must evaluate the companies behind the OTC stock and learn how fundamentally sound they are and if they and have addressed or overcome any problems.  Investors should check the critical financial data, specifically their cash flow, capital, earnings per share (EPS), recent sales, and book value. 

Any newcomers to OTC stocks should practice trading securities first, due to the volatile and unpredictable nature of the commodities market.  A number of online virtual trading programs allow you to trade stocks, futures and options without any actual financial risk.

Disclaimer: Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.







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