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What is a "value" stock?

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What is a "value" stock?

Value companies are companies that the market perceives to be in distress of some form. What that means is that it is traditionally measured by a book to market ratio. The book value is what the accountants say a company is worth (say one billion dollars). The market is what the stock market says it's worth (say it would be 9 dollars). If you think about that, you're actually able to buy this company for less than what it was really worth and that's where the term value comes from. Why it is a value company is because the market doesn't believe it has great growth opportunities. Value companies, because of this, are riskier companies and historically have tended to give us a higher return because we're taking greater risk.

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What is a "value" stock?

What is a "value" stock?

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