What Is Value Investing?

Value investing is an investment strategy that involves the use of fundamental analysis to find securities that are selling below their perceived intrinsic value. While there is no single way to calculate intrinsic value, analysts and investors commonly use measures such as a stock’s price-to-earnings (P/E) ratio or price-to-book (P/B) ratio to identify value stocks.

A value investing strategy is generally contrasted with a growth investing strategy, which seeks to find stocks with the best ability to grow their earnings over time. As a result, value stocks generally pay dividends and have lower relative P/E multiples, whereas growth stocks generally do not pay dividends and…