Why Pure-Play Stocks Can Be Great Investments (and 1 to Buy)

Investing is full of trade-offs, from great companies that are expensive stocks to O.K. companies that are cheap stocks. Maybe you found a company with amazing growth, but it's generating losses. Or great earnings and a growing dividend but low growth in the underlying business. It's also common to find companies and conglomerates with diversified business units and pure-play companies.

Pure-play companies have high exposure to one thing and try to do that thing well, whereas diversified companies try to do many things well. That will leave the diversified company better prepared to manage risk at the expense of dampening upside. But it also leaves the pure-play company better positioned to grow. Here's why pure-play stocks can be such great investments but also risky, and why ConocoPhillips (NYSE: COP) could be a great buy now.

An oilfield worker checking a pipeline gauge. Image source: Getty Images.

Source Fool.com