What are 'value stocks'? Definition & meaning

Stocks in companies that aren’t necessarily growing fast, but instead are dependable and stable.

These are stocks in companies that aren’t necessarily growing fast, but instead are dependable and stable. The stock price might be less than what the company is actually worth.

Investors choose value stocks because they expect the market to realise the true value of the stock over time, and the price will rise.

Value stocks tend to have a lower price-to-earnings (P/E) ratio, pay dividends, and are seen as lower risk with steadier returns. Please keep in mind that no stocks are risk free and you may lose what you put in.

Older, established companies like banks, manufacturers, or consumer goods firms are typically where you will find value stocks.

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Retail Prices Index (RPI)

An index published each month by the Office for National Statistics, which measures the level of retail prices in the UK. Cash flows on all index-linked gilts are linked to the RPI.

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.

Hedge Fund

Investment funds that are often associated with riskier and shorter-term trading strategies.

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Arithmetic Mean

The sum of a set of numbers added together and then divided by the total amount of numbers in that set.

Oligopoly

A situation in which a market or industry is controlled by a small group of companies.

Yield curve

A graphical representation of interest rates over time

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Value Stocks