Value stock

Quick definition

Value stocks are shares in a company that is trading at a lower price in the stock market than what it is worth.

Key details

  • Value stocks are shares in a company that trade at levels lower than the company fundamentals (i.e. earnings, dividends, sales, etc.).
  • A bargain price is characteristic of a value stock in the stock market 
  • Value stocks are appealing to investors as they view the company as unfavourable for the marketplace and enjoy its prices that are lower than market values

What is a value stock?

A value stock is a share in a company that is appealing to investors because it trades at a bargain price relative to what the company is worth (i.e. earnings, dividends, sales). The idea behind investment in these stocks is that the market is inefficient at valuing the company’s actual worth.

The market’s skepticism towards value stocks is what keeps value investors interested at a bargain price. This skepticism normally stems from bad news, seasonal nature of business, bear markets, etc. In order to profit from a value stock, the market must change its perception of the company.

A skeptical market means that value stocks are intended for investors that have larger risk appetites. Due to the higher risk that these stocks pose, value investors are more likely to benefit from a greater return in the long run.

Where can I learn more?

To learn further, check out our courses. They provide the guidelines you need to start investing in stocks today.

Sources & references
Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

Srijani Chatterjee
Financial Writer
Srijani is the quintessential Third Culture Kid having grown up in India, Singapore, Malaysia, The Netherlands, Scotland, and England. She still loves to travel and speaks… read more.