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CPP Investments | Investissements RPC
What are value stocks? Why do you need to know this definition? The MoneySense Glossary is your resource for learning and understanding financial terms.
Stocks viewed as bargains relative to the underlying value of the business are referred to as value stocks. Value stocks are often identified by low price-to-book-value (P/B) ratios or low price-to-earnings (P/E) ratios. Investors expect to profit when prices eventually rise to reflect the intrinsic value of the business.
Example: “When researching value stocks, investors must determine whether a stock trading at a low price-to-earnings ratio is truly a bargain or just a bad business trading at a fair price.”
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