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Definition

The word "speculative" is usually applied to smaller companies, usually newly-listed, which don't have a track record of profits and which can be viewed as risky "penny stocks". These shares are seen as risky because their value can rise or fall rapidly off a low base. So quick profits can be made, but they can be lost just as quickly. If you are a beginner at investing on the stock market, we recommend that you stay away from speculative shares to begin with and rather stick to blue chip shares which are the opposite in nature - they have a strong record of profits over many years and are a safe place to put your money. A key difference between blue chips and "specs" is that blue chips generally pay dividends out regularly. Speculative shares usually plough all their profits back into growth. Many commodity shares are considered speculative - especially those involved in exploration or which are not yet producing. A good example of a speculative share is Orion Minerals (ORN). ORN is an Australian exploration company which is listed on the JSE (September 2017) and on the Australian Stock Exchange in Sydney. It is trying to find funding for its copper and zinc mine in Prieska. The Prieska mine was previously operated by Anglovaal, but stopped operating in 1990 after 20 years during which it extracted more than 1 million tons of zinc and 430 000 tons of copper concentrate. The main problem with the mine is flooding. Orion hopes to exploit this resource with a mechanised approach and minimum labour. The share price has oscillated from a high of 81c to a low of 16c as its fortunes have changed. In its results for the six months to 30th June 2023 the company reported an operating loss of A$17,13m compared to A$15.53 from the previous period. The headline loss per share was 31c compared with a 33c loss in the previous period.

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