Value Stock

AAA

DEFINITION of 'Value Stock'

A stock that tends to trade at a lower price relative to it's fundamentals (i.e. dividends, earnings, sales, etc.) and thus considered undervalued by a value investor. Common characteristics of such stocks include a high dividend yield, low price-to-book ratio and/or low price-to-earnings ratio.

INVESTOPEDIA EXPLAINS 'Value Stock'

A value investor believes that the market isn't always efficient and that it's possible to find companies trading for less than they are worth. An easy way to attempt to find value stocks is to use the "Dogs of the Dow" investing strategy - buying 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
  1. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends ...
  2. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  3. Value Trap

    A stock that appears to be cheap because the stock has been trading ...
  4. Fire Sale

    Selling goods or assets at heavily discounted prices. Fire sale ...
  5. Growth Stock

    Shares in a company whose earnings are expected to grow at an ...
  6. Undervalued

    A financial security or other type of investment that is selling ...
Related Articles
  1. Markets

    Relative Valuation Of Stocks Can Be ...

  2. Active Trading

    Warren Buffett: How He Does It

  3. Forex Education

    Using The Price-To-Book Ratio To Evaluate ...

  4. Active Trading

    The Value Investor's Handbook

Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  5. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  6. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
Trading Center