What is value stock?
Value stock, also known as value investing, is an investment style that involves buying stocks of companies that are undervalued by the market. This style of investment focuses on buying companies with strong fundamentals and financials at a low price compared to their intrinsic worth.
Why value stock investing?
Value investors look for companies that may be overlooked by the market and offer potentially higher returns than the broader market.
The goal of value investing is to purchase stocks at a discounted price relative to the company's actual worth. This differs from growth investing, which looks for quickly growing companies regardless of the price paid for their stock, or momentum investing, where an investor buys a stock for its recent history of outperforming its peers.
Value stock vs Stock stock
Value stocks and growth stocks represent differing approaches to investing, each with its considerations for investors. Value stocks have intrinsically low stock prices and current returns, but offer the promise of greater gains if future business outcomes improve. On the other hand, growth stocks are known for their potential to increase rapidly in value due to expectations of strong business growth. They often come with higher market prices than value stocks but may lack consistent dividend distributions while they strive to reach their targets.