Value stocks

Value stocks

Stocks with low price/book ratios or price/earnings ratios. Historically, value stocks have enjoyed higher average returns than growth stocks (stocks with high price/book or P/E ratios) in a variety of countries.

Value Stocks

Stocks with prices lower than their intrinsic value. One may identify value stocks in a variety of ways, but two of the most popular are finding companies with low P/E ratios or low price-to-book ratios. In both cases, the stock price for a company is lower than its earnings per share or its asset value per share. These companies are thought to have high profit potential because it is thought that the share price will eventually rise to match the company's real value. See also: Buy and hold, Warren Buffett, Benjamin Graham.
References in periodicals archive ?
Since many investors sell their poorest performers, they have tended to dump value stocks (especially deep value stocks), accelerating these stocks' decline and sending them into something like a free fall.
This will no doubt sort itself out when the Fed raises interest rates, but what happens to value stocks in the meantime?
Another investor who has felt the chill of the stealth bear market is Tom Bartkoski, whose diversified portfolio is weighted toward so-called value stocks, or those whose prices are low relative to earnings, assets and sales.
These ideas, dating back to Graham and Dodd,(1) state that investing in value stocks - defined as stocks with low prices relative to some measures of their current fundamentals, such as earnings or dividends - is more attractive than investing in growth stocks, those with high prices relative to measures of fundamentals.
Today the Turner Funds is introducing two no-load stock mutual funds, the Turner International Core Growth Fund, which invests in large and mid-cap growth stocks from markets around the world, and the Turner Midcap Equity Fund, which invests in both growth and value stocks with market capitalizations represented in the Russell Midcap Index.
And if you zoom in a little further, you'll see that small cap value stocks outperform small cap growth stocks.
After all, large-capitalization stocks usually aren't cheap, while value stocks are supposed to be inexpensive based on key measures such as their price-to-earnings ratio.
In past years, he said, the flows of cash into mutual funds concentrating on value stocks and those concentrating on growth stocks were about even.
One often hears how value stocks outperform growth stocks; hence the value stock anomaly.
Market leadership is likely to shift to large-capitalization value stocks in an economic slowdown, Eley predicts.
That the shift away from the Nifty Fifty and into value stocks has been accomplished as the broader indexes are rising is just another case of history being made by this prolonged bull market.
CHICAGO -- Richard Moroney says a diversified basket of small and midcap value stocks is a winning strategy.