Drill-Bit Stock

Categories: Trading, Investing

No, drill-bit stocks don’t have anything to do with construction or DIY home projects. Rather, they refer to stocks that sell for less than a dollar—like the dollar tree of stocks. Cheap, cheap, cheap.

Where’d the name come from? If you’ve ever used a drill, you know that drill-bits come in all different sizes, and that those sizes are fractions that get smaller, smaller, smaller. The drill-bit stock as a name came from this sizing of drill-bits...and because stocks used to look like that, in fraction form. Now, as you probably know, stock prices are only ever shown in decimals, not fractions. But the name stuck, and here we are.

Drill-bit stocks aren’t super normal...usually they’re cheap for a reason. Maybe a company is trying to get people to buy by discounting their stocks, like if they just had an IPO party, or if a company is maybe-going-bankrupt and is trying to save itself, like an S.O.S.

So even though these stocks are cheap, they’re probably cheap because they’re risky. Proceed with caution (same deal with actual drill-bits).

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