A value stock is a stock that trades at a lower price relative to its intrinsic value, often identified by metrics like dividends, earnings, or sales. Investors buy value stocks believing the market has undervalued them and expect their price to rise as the market corrects over time.
Value Stock
Definition
A value stock is a stock that trades at a lower price relative to its intrinsic value, often identified by metrics like dividends, earnings, or sales. Investors buy value stocks believing the market has undervalued them and expect their price to rise as the market corrects over time.
Example
A well-established company with consistent earnings but a temporarily depressed stock price due to a recent industry downturn might be considered a value stock by investors seeking bargains.
Key Points
- 1Trades below its intrinsic value.
- 2Often pays dividends.
- 3Less volatile than growth stocks.
- 4Sought by investors looking for bargains.
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