Liquidity

Blue chips

Stocks that are included in the Bovespa index (IBOVESPA) are normally considered first line. Stocks called blue chips, large caps or 1st line refer to those with high perceived quality, liquidity and earnings.

The main attributes of this type of stock

• Solid growth
• Income and profit generation
• Efficient management
• A good relationship with the market
• Generation of earnings for shareholders (dividends, premiums etc)

Sometimes, they are defined simply as companies with high market value.

Middle caps or 2nd line stocks

Involve good quality large and medium size companies. They have the following characteristics:

• Less liquidity
• The return can be a good profit or a monumental loss

In general, it refers to the group of stocks well-regarded by investors, but not included in those most traded.

Small caps or 3rd line

They are those stocks with little liquidity, in general small or medium sized companies whose stock is not regularly traded.

Normally, they do not attract great investor interest because they are shares of companies with less financial stature. In sum, the comparative picture of stocks: