Value Stocks

Value stocks usually refer to established companies that have proven their ability to perform and are deemed to be trading at a price below their fundamentals. This appeals to value investors as they are trading at a ‘bargain’. Common features of value stocks are:

• Higher dividend yield. Value stocks tend to show a lower and slower growth rate than the market average. However, their earnings are often stable and provide higher dividend income than growth stocks.
• Low P/E and P/B ratio. Value stocks are undervalued, and their prices are low with their earnings and book value, which indicates that these companies hold attractive growth prospects in the long run.