Undervalued Stock

Undervalued stock

An undervalued stock is defined as a stock that is selling at a price significantly below what is assumed to be its intrinsic value. For example, if a stock is selling for $50, but it is worth $100 based on predictable future cash flows, then it is an undervalued stock. The undervalued stock has the intrinsic value below the investment's true intrinsic value. Numerous popular books discuss undervalued stocks. Examples are The Intelligent Investor by Benjamin Graham, also known as "The Dean of Wall Street," and The Warren Buffett Way by Robert Hagstrom. The Intelligent Investor puts forth Graham's principles that are based on mathematical calculations such as the price/earning ratio. He was less concerned with the qualitative aspects of a business such as the nature of a business, its growth potential and its management.

Data Source : Wikipedia

• Related Topics:  Stock Valuation - Stock Valuation Is The Method Of Calculating Theoretical Values Of Companies And Their Stocks., Value Investing - Value Investing Is An Investment Paradigm That Involves Buying Securities That Appear Underpriced By Some Form Of Fundamental Analysis., Penny Stock - Penny Stocks Are Common Shares Of Small Public Companies That Trade For Less Than Five Dollars Per Share., Multibagger Stock - A Multibagger Stock Is An Equity Stock Which Gives A Return Of More Than 100%. The Term Was Coined By Peter Lynch In His 1988 Book One Up On Wall Street And Comes From Baseball Where "Bags" Or "Bases" That A Runner Reaches Are The Measure Of The Success Of A Play., Finance Theories, Valuation (Finance), Stock Market, Investment, Business Terms