Value investors use metrics related to fundamental analysis to help them identify undervalued stocks. These metrics include financial ratios such as price-to-earnings, price-to-book, debt-to-equity, and price/earnings-to-growth.

Value investors believe that the market overreacts to good and bad news and that this causes stock price movements out of sync with a company’s long-term fundamentals. Thus, when a stock’s valuation appears lower than the market price, value investors may snap it up. Value investing was championed by Benjamin Graham in the first half of the 20th century. Berkshire Hathaway leader Warren Buffett is perhaps the most well-known value investor.