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.

More terms

Custodian bank

Learn what a custodian bank is.

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Accounting standards

The rules a company follows when preparing financial statements.

Total Return

This is the measurement of a fund’s performance in a specific period.

Real Estate Investment Trust (REIT)

An investment trust specialised in investing in commercial property such as parking garages or GP offices.

UK Treasury bill

A debt instrument issued by the UK government with a maturity of less than one year.

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.

United States Dollar (USD)

The famous greenback our friends in the US use as currency.

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

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Value Stocks