Value stocks are stocks trading lower than their financial fundamentals suggest. They are perceived as undervalued, and have the potential to rise. Many new tech stocks, for instance, start out as growth stocks and transition into value stocks.
They have a low price-to-earnings and price-to-book ratios—which is why they’re less expensive than growth stocks. Due to this fundamental distinction, a value stock is often traded at a more affordable rate than a growth stock.
To investors, they see companies that fall into this category as undervalued. These investors are less likely to invest in a growth stock because they feel that value company’s stock will eventually reach their full potential once they are recognized by the market.
Generally speaking, the climb is steady for value stocks. The only other way for it to emerge into the market like a growth stock is for it to be a bit more innovative with its products or services.
Pat McKeough is an expert at delving into a company’s financial statements and identifying undervalued securities and value stocks. That’s because value stocks are the foundation of any long term investment strategy, at TSI Network we also recommend our three-part Successful Investor strategy:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
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We still recommend all investors strive to own two to three of these top banks.
While CIBC has the highest exposure to the domestic housing market among Canada’s Big Five banks, it cuts this risk by keeping the value of its mortgages and other loans well below the appraised value of those properties.
The bank also continues to cut its operating costs, particularly as more of its customers opt to use the Internet instead of physical branches. Those savings will let CIBC keep rewarding investors with higher dividends and share buybacks.
In June 2015, Gannett Co. Inc. (New York symbol GCI) spun off its newspaper operation as a separate company operating under the Gannett name.