Investing in Value Stocks

By Jeremy Bowman – Updated Oct 11, 2025 at 4:30 PM | Fact-checked by Frank Bass

Key Points

Value stocks offer a low-cost entry into well-established companies, enabling investment in underpriced assets.
Investing during market downturns provides opportunities to buy value stocks at even lower prices, maximizing returns.
Metrics like P/E ratio help identify value stocks by comparing market price against company earnings, assessing true worth.

Value investors want to buy stocks for less than they're worth. If you could buy $100 bills for $80, wouldn't you do so as often as possible?

Even high-quality companies with strong fundamentals see share prices fall when the overall stock market drops. Plus, value stock companies tend to be well established and less volatile than growth stock companies.

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An infographic identifying various characteristics of value stocks, like their steady growth rates and stable earnings. — Image source: The Motley Fool.

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NYSE: BRK.B

Berkshire Hathaway

Today's Change

(-0.44%) $-2.08

Current Price

$475.46

Key Data Points

Market Cap

$1030B

Day's Range

$473.15 - $478.84

52wk Range

$437.90 - $542.07

Volume

374K

Avg Vol

4.4M

Gross Margin

24.15%

Dividend Yield

N/A

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2. Target

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NYSE: TGT

Target

Today's Change

(-1.37%) $-1.27

Current Price

$91.45

Key Data Points

Market Cap

$42B

Day's Range

$90.90 - $92.66

52wk Range

$85.36 - $158.42

Volume

5.7M

Avg Vol

Gross Margin

25.43%

Dividend Yield

0.05%

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3. General Motors

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NYSE: GM

General Motors

Today's Change

(-1.26%) $-0.87

Current Price

$68.22

Key Data Points

Market Cap

$64B

Day's Range

$67.78 - $68.93

52wk Range

$41.60 - $70.24

Volume

10M

Avg Vol

8.4M

Gross Margin

9.37%

Dividend Yield

0.01%

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NYSE: SIG

Signet Jewelers

Today's Change

(-0.91%) $-0.90

Current Price

$97.95

Key Data Points

Market Cap

$4B

Day's Range

$96.34 - $98.18

52wk Range

$45.55 - $110.20

Volume

24K

Avg Vol

863K

Gross Margin

39.50%

Dividend Yield

0.01%

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Growth Stock

A company expected to increase its revenue and earnings at an above-average rate compared to its industry or the overall market.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

TMFHobo

@TMFBowman

Jeremy Bowman has positions in Amazon and Target. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Costco Wholesale, Microsoft, Target, Tesla, and Walmart. The Motley Fool recommends FedEx and General Motors and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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How to find value stocks

The point of value investing is to find companies trading at a discount to their intrinsic value, with the idea that they'll likely outperform the overall stock market over time. However, finding undervalued stocks is easier said than done. That said, here are three of the best metrics to keep in your toolkit as you search for a bargain:

P/E ratio: This is the best-known stock valuation metric -- and for good reason. The P/E ratio can be a very useful tool for comparing the valuations of companies in the same industry. To calculate it, simply divide a company's price per share by its past 12 months of earnings per share.

Price/earnings-to-growth (PEG) ratio: This is similar to the P/E ratio, but the PEG ratio adjusts to level the playing field between companies that might be growing at slightly different rates. By dividing a company's P/E ratio by its annualized earnings growth rate, you get a more apples-to-apples comparison between different businesses.

Price-to-book value (P/B) ratio: Think of the book value as what would theoretically be left over if a company stopped operations and listed all of its assets for sale. Calculating a company's share price as a multiple of its book value can help identify undervalued opportunities, and many value investors specifically look for opportunities to buy stocks trading for less than their book value. This is sometimes known as an "asset play."

Why invest in value stocks?

There are a number of reasons why investing in value stocks can be a good strategy.

Value investing tends to be more methodical than growth investing. It's typically easier to identify a stock that is a good value than to predict a business's long-term growth rate.

Value stocks typically have less downside than growth stocks. Since their valuations are already low, they have less room to fall than growth stocks.

Value stocks often pay dividends. Their yields can be high, as dividend yields are inversely correlated with valuations.

Value investing can pay off when the market is expensive. When the market gets frothy, value stocks tend to be better long-term bets.

Investing in Value Stocks

Key Points

Key Data Points

2. Target

Key Data Points

3. General Motors

Key Data Points

Key Data Points

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Key Data Points

Key Data Points

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2. Target

3. General Motors

4. Signet Jewelers

What are value stocks?

How to choose value stocks

How to invest in value stocks

Value investors

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FAQ

4 best value stocks for beginners

1. Berkshire Hathaway

Key Data Points

Key Data Points

How to find value stocks

Why invest in value stocks?