Value stock
Definition · Level 9 · Valuation
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A share trading at low multiples (P/E, P/B) or a high dividend or FCF yield relative to the market, often a mature or out-of-favor business; the bet is that pessimism is overdone.
Example
A bank at 0.9x book and 8x earnings, yielding 4.5%.
Where Tradecraft teaches it
Level 9 · Valuation, in the lesson “Investing styles and sell-side vocabulary”: Growth vs value, quality, moats, cyclicals vs defensives, ratings, targets and re-ratings.
Related terms
- Cyclical vs defensiveSectors whose earnings swing with the economy (autos, airlines, semis, materials) versus those with steady demand through recessions (staples…
- Growth vs valueInvesting styles: paying high multiples for fast growers whose worth lies in far-future cash flows, versus buying low-P/E, low-P/B or high-yield…
- InitiationAn analyst’s (or bank’s) first published rating and target on a stock, typically with a long in-depth report.
- MoatA durable competitive advantage — brand, network effects, switching costs, scale or patents — that keeps returns on capital high for years despite…
- Multiple expansion / compressionThe market paying more or less per dollar of earnings (P/E up or down), independent of earnings growth; also called a re-rating or de-rating.
- Overweight / outperformBuy-equivalent sell-side ratings: the analyst expects the stock to beat its sector or the market.