Value Stock

Value stock. Value stocks, also known as undervalued stocks, trade at a lower price than the company's reputation, earnings outlook, or financial situation would seem to merit.

Investors who seek them out expect the company's fortunes to turn around, and the price of the stock to increase accordingly.

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Value Stock

What Does Value Stock Mean?

A stock that trades at a lower price relative to its fundamentals (dividends, earnings, sales, etc.); value stocks are considered undervalued by a value investor. Common characteristics of such stocks include a high dividend yield, a low price-to-book ratio, and/or a low price-toearnings ratio.

Investopedia explains Value Stock

A value investor believes that the stock market is often inefficient and that it is possible to find companies trading for less than what they actually may be worth. One popular way to identify value stocks is to check the “Dogs of the Dow” investing strategy: buying one of the 10 highest dividend-yielding stocks on the Dow Jones at the beginning of each year and adjusting it every year thereafter.

Related Terms:
• Earnings
• Growth Stock
• Price-to-Book Ratio—P/B Ratio
• Style
• Value Investing