Investing term
What is Value stock?
A stock priced low on standard multiples relative to its fundamentals — usually slower-growing.
A value stock trades at a low price relative to fundamentals like earnings or book value — often a slower-growing, out-of-favor, or boring business. Value investing bets that such stocks are underpriced and will recover toward fair value. The risk is the value trap: some cheap stocks are cheap for good, permanent reasons rather than temporary pessimism.
For example
A stable, unglamorous company at a P/E of 9 versus the market's 20 is a value stock — cheap, with the bet that the market is too gloomy on it.
Value stock is taught hands-on in Stage 15 — Valuation for Investors.
See the lesson →