Scroll Top


    Pure Play

    What is Pure Play?

    What would you look for when you're trying to invest your money in the stocks of various companies? You may be looking for companies that will provide you with a steady stream of dividend income. Or, you may want to put your cash into businesses that can endure financial pressures.

    Along with these factors, you may want to look at certain kinds of stocks—of companies that have diversified activities or those that have a single line of goods or businesses. The latter is known as pure plays.

    Breaking Down Pure Play

    A pure-play is a term for investors for a publicly-traded firm that focuses its energies and resources on only one business line. As such, its stock performance is highly correlated with the performance of its particular industry or sector.

    Many retailers in the electronics, e-commerce companies, or e-tailers are pure plays. All they do is sell one specific product type over the internet. Therefore, if the interest in digitally purchasing it declines only marginally, those businesses will be adversely affected.

    Examples of Pure Play

    Pure plays can also be big corporations. For instance, Dunkin' Brands Group (DNKN), which owns coffee shops at the Dunkin' Donuts, and Starbucks (SBUX) represent pretty pure coffee plays. An investor or a trader who wants to get in on this caffeinated commodity's rising prices should probably aim at them.

    The J.M. Smucker Company (SJM), on the other hand, wouldn't be a pure-play because even though it owns big java brands, such as Folger's, it also owns, and maybe is primarily associated with, jams, jellies, and other food items. It is more of a play on food than a game on coffee.

    Investing in Pure Plays

    The first reason is that it is much easier to analyse the pure-play companies. Because they are involved in only one type of business or product line, their profits and cash flows are much easier to follow and understand; it's just not that complicated. This, in effect, makes the business models extremely predictable.

    These companies serve a niche market, so their revenues increase when they do well and become famous. This plays out in investors' financial rewards—their stock values, or an increase in dividends if they pay them out.

    Popular Topics

    Latest Articles

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use


    ISO 27001

    Data Center


    SSL Certified Site

    128-bit encryption