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.