What are the risks of investing in value stocks?

The biggest risk of investing in value stocks is the potential to invest in a value trap. This is a stock that looks cheap, but it's cheap because the company is declining. Typically, owning shares of a declining company is a recipe for losing money in the stock market.

What are some strategies for investing in value stocks?

To find value stocks worth buying, it's a good idea to start with some stock screens to find stocks trading at low P/E ratios or low valuations, according to other metrics. However, that alone isn't sufficient. You can do a discounted cash flow valuation to see whether the stock is trading for less than the present value of its future cash flows. While it's impossible to predict future cash flows perfectly, the exercise should help give you a sense of whether the stock offers value.

What is a good P/E ratio for a stock?

A good P/E ratio for a stock depends on multiple factors. It's more than just looking at a number. To understand whether a stock has a good P/E ratio, it's a good idea to compare it to its peers and the S&P 500. If it's growing faster than its peers and trades at a lower or even equal P/E ratio, for example, that's a sign that the stock is a good value. A P/E ratio less than 10 would generally be considered cheap, but that's different from offering value since the number alone doesn't tell you enough about the company without looking at its financial performance.

Why are value stocks crucial during market volatility?

Value stocks are crucial during periods of market volatility and bear markets because they act as a ballast for your overall portfolio. Value stocks tend to be less volatile than the overall market and also outperform during bear markets. Value stocks shine in tough times.

Is value investing hard?

Beating the market with any investing strategy is not easy, and that's true of value investing. However, the value investing approach is more intuitive than others. To get started, it's a good idea to look at some stock screeners to narrow down stocks according to valuation, and then research individual companies to see if their prospects exceed their relative valuation.

What is the difference between value stocks and growth stocks?

Value stocks tend to be slow-growing companies that are attractive because the stocks offer good value, meaning they're trading for less than they're worth. Growth stocks are attractive because they are growing faster than the average company in the market.

4 Best Value Stocks to Buy Now in 2026

6 Best Value Stocks to Buy Now in 2026

By Jeremy Bowman – Updated Apr 8, 2026 at 10:14 PM EST | Fact-checked by Frank Bass

Key Points

Value stocks are bought below worth, offering opportunity during market drops.
Investors view Berkshire's $375 billion cash as potential for major moves.
General Motors trades low at a P/E of 7, signaling a potential value stock.

Value investors want to buy stocks for less than they're worth, like buying $100 bills for $80. Even high-quality companies with strong fundamentals see share prices fall when the overall stock market drops, and that's when value investors go shopping.

Here's an overview of some excellent beginner-friendly value stocks and key concepts that value investors should know.

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

Top value stocks to consider

Ticker Information Table
Name and ticker	Market cap	Dividend yield	Industry
Berkshire Hathaway (NYSE:BRKB)	$1.0 trillion	0.00%	Diversified Financial Services
Target (NYSE:TGT)	$55.8 billion	3.69%	Food and Staples Retailing
General Motors (NYSE:GM)	$69.4 billion	0.82%	Automobiles
Signet Jewelers (NYSE:SIG)	$3.6 billion	1.41%	Specialty Retail
AT&T (NYSE:T)	$191.5 billion	4.06%	Diversified Telecommunication Services
Bank of America (NYSE:BAC)	$372.3 billion	2.12%	Banks

Data as of Apr 9, 2026. Showing 6 of 6 tickers.

1. Berkshire Hathaway

NYSE: BRKB

Berkshire Hathaway

Today's Change

(0.35%) $1.67

Current Price

$479.75

Key Data Points

Market Cap

$1.0T

Day's Range

$477.68 - $483.75

52wk Range

$455.19 - $542.07

Volume

4.7M

Avg Vol

4.8M

Gross Margin

23.63%

Berkshire Hathaway (BRK.A +0.51%) (BRK.B +0.35%) has long been the gold standard for value investors, built on Warren Buffett's discipline of buying great businesses at fair prices. Since Buffett took over in 1964, Berkshire has nearly doubled the S&P 500's annualized return over more than 55 years -- a track record unlikely to be matched.

Buffett stepped down at the end of 2025, handing the reins to Greg Abel. The transition introduces some uncertainty, but Abel is expected to maintain the same value-oriented approach. Meanwhile, Berkshire sits on more than $375 billion in cash -- dry powder that could fuel a major acquisition or even a first-ever dividend. One note of caution: Berkshire was a net seller of stocks in 2024 and 2025, a signal that Buffett viewed the broader market as expensive.

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2. Target

NYSE: TGT

Target

Today's Change

(3.01%) $3.60

Current Price

$123.12

Key Data Points

Market Cap

$56B

Day's Range

$120.00 - $123.33

52wk Range

$83.44 - $126.00

Volume

3.6M

Avg Vol

6.3M

Gross Margin

25.44%

Dividend Yield

3.69%

Target (TGT +3.01%) is one of only a handful of national multicategory retailers, with stores in all 50 states and a growing e-commerce and same-day fulfillment business. After a rough stretch, including weak consumer discretionary spending, inventory issues, theft, and customer backlash over DEI policy changes, the stock trades at a P/E of 15, a compelling price for a retailer of this quality. New CEO Michael Fiddelke has introduced a turnaround plan, sparking a rally in the stock in 2026.

Target is also a Dividend King with a 3.8% yield, and the company expects 15% total sales growth over the next five years, which should drive the stock higher if it can execute on that goal. Its challenges are real but fixable, which is exactly the kind of setup value investors look for.

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3. General Motors

NYSE: GM

General Motors

Today's Change

(5.47%) $3.98

Current Price

$76.74

Key Data Points

Market Cap

$69B

Day's Range

$75.72 - $77.06

52wk Range

$42.62 - $87.62

Volume

7.2M

Avg Vol

8.3M

Gross Margin

6.27%

Dividend Yield

0.82%

By pure valuation, General Motors (GM) (GM +5.47%) may be the most obvious bargain on this list. It trades at a P/E of just 7 based on adjusted EPS -- a reflection of investor skepticism about the auto industry's direction and tariff uncertainty.

But GM has been making smart moves: shutting down its money-losing Cruise autonomous vehicle unit, scaling back EV investment as the transition slows, and aggressively buying back stock. It has reduced shares outstanding by nearly one-third over the last 18 months, a powerful way to grow EPS even without growing revenue.

4. Signet Jewelers

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NYSE: SIG

Signet Jewelers

Today's Change

(3.12%) $2.74

Current Price

$90.46

Key Data Points

Market Cap

$3.6B

Day's Range

$89.10 - $93.44

52wk Range

$52.14 - $110.20

Volume

729K

Avg Vol

968K

Gross Margin

39.51%

Dividend Yield

1.41%

Signet Jewelers (SIG +3.12%) is the world's largest diamond jewelry retailer and, at a $3.8 billion market cap, the smallest name on this list, but value stocks come in all sizes. It trades at a P/E of less than 10 based on adjusted EPS, and the company has used that discount to its advantage, buying back 6% of shares outstanding in the last four quarters alone. Shares outstanding have fallen by roughly half over the past decade.

Concerns about lab-grown diamonds have weighed on the stock, but Signet is actually benefiting from that trend through higher average unit prices and new entry-level price points. Factoring in a smaller real estate footprint and a growing high-margin services business (repairs, warranties), there's a clear path to improved profitability.

5. AT&T

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NYSE: T

AT&T

Today's Change

(-2.46%) $-0.69

Current Price

$27.35

Key Data Points

Market Cap

$191B

Day's Range

$26.91 - $27.50

52wk Range

$22.95 - $29.79

Volume

48M

Avg Vol

45M

Gross Margin

42.93%

Dividend Yield

4.06%

AT&T is a classic value stock in many ways. It's one of three large telecom companies in the country, and it competes in an industry with high barriers to entry, high capital expenditures, and wide profit margins.

It trades at a P/E ratio of 9.2 and offers a dividend yield of 4%.

Over the last few years, AT&T has worked hard to rebuild its business after making misguided investments in media companies like Time Warner. The company has invested in its core infrastructure and operations, and that's helped drive a recovery in the stock. It also acquired Lumen Technologies in 2025 to expand its fiber business to the western U.S. The business has stabilized and is poised for steady growth.

6. Bank of America

NYSE: BAC

Bank of America

Today's Change

(3.18%) $1.60

Current Price

$51.88

Key Data Points

Market Cap

$372B

Day's Range

$51.37 - $52.26

52wk Range

$34.63 - $57.55

Volume

36M

Avg Vol

42M

Dividend Yield

2.12%

Bank of America is the second-largest bank by assets in the U.S., behind JPMorgan Chase, and its business covers both commercial banking and investment banking thanks to its ownership of Merrill Lynch.

Financial stocks tend to trade at low valuations due to their cyclical risk, and as of April 2026, Bank of America currently has a P/E ratio of 13, and offers a dividend yield of 2.2%.

The company has been opening new locations, entering new markets like Louisville and Milwaukee, as having a physical presence is key to attracting new customers. It also acquired a $9 billion mortgage portfolio from TD, showing it has its eye on growth.

Additionally, CEO Brian Moynihan has long been a favorite of Warren Buffett.

What makes a stock a value stock?

A value stock is one that trades at a lower price than its financials suggest it's worth. That gap between price and intrinsic value is what value investors are hunting for.

Most value stocks share a few common traits: they're typically mature, established businesses with stable revenues and earnings, modest but steady growth, and often a dividend. They're not exciting, and that's the point. Their share prices tend to be lower precisely because the market isn't pricing in much future growth.

It's worth noting that a cheap stock isn't automatically a value stock. Sometimes a low valuation reflects real, lasting problems rather than a temporary discount. The goal is to find stocks where the market has overreacted, and where the underlying business remains sound.

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Don't underestimate the power of value stocks

While they may not be quite as thrilling as their growth stock counterparts, it's important to realize that value stocks can have just as much long-term potential, if not more. After all, a $1,000 investment in Berkshire Hathaway at the beginning of 1965 would be worth more than $28 million today.

Finding companies that trade for less than they are truly worth is a time-tested investment style that can pay off tremendously.

FAQ

Investing in value stocks FAQ

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, Netflix, Nike, RH, and Target. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Costco Wholesale, Microsoft, Netflix, Nike, Target, and Tesla. The Motley Fool recommends FedEx, General Motors, and RH. The Motley Fool has a disclosure policy.

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 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.

How to invest in value stocks

Open your brokerage app: Log in to your brokerage account where you handle your investments.

Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.

Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.

Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.

Submit your order: Confirm the details and submit your buy order.

Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Reasons for undervaluing a stock

There are a lot of reasons why investors might undervalue a stock. Let's take a look at a few of them.

Recency bias: Stocks can plunge on a single bad earnings report, even though it might be just a result of one-time issues. Investors tend to pay more attention to recent events, meaning one piece of bad news can cause a stock to become oversold. Of course, a stock plunging isn't necessarily a signal that it's undervalued. You have to investigate it to see why it fell and whether it's still healthy.

Short-term bias: Investors also have a tendency to pay more attention to what they can see in the short term. For example, the sell-off in April 2025 was arguably a result of short-term bias. Investors feared that tariffs would crush the economy. After some negotiations and adjustments, stocks quickly recovered to all-time highs.

Cyclicality: Cyclical stocks rise and fall based on macro factors in the economy. Value investors can do well picking up these stocks when they're at a low point in the economic cycle. Currently, some consumer discretionary stocks, like fast-casual restaurants, have fallen sharply on weak consumer spending, and there could be some opportunities in this sector.

Turnarounds: Turnarounds don't always turn as some investors say, but sometimes they do pay off. If there's evidence that a turnaround is starting to work, that can be a good opportunity to buy a value stock. Nike (NKE +1.03%), for example, has shown hints of a turnaround though the stock has continued to fall.

Transitional business models: Sometimes, companies change their business models, and the stock plunges when the results initially disappoint. For example, Netflix (NFLX +0.53%) stock tumbled in the early stages of its streaming launch before going on to deliver huge returns. Similarly, RH (RH +4.96%), formerly Restoration Hardware, plummeted when it switched to a membership-based business model, though the stock surged after that move paid off.

Temporary headwinds: Sometimes, business conditions are challenging, but they are temporary. Netflix reported two straight quarters of subscriber declines after the COVID-19 pandemic, but that was because consumers were reverting to pre-pandemic norms for how they spent their time. That headwind proved to be temporary.

Tax considerations for value investors

The tax implications for value investors are similar to what they are for any stock investor. You'll have to be mindful of short-term and long-term capital gains, investing in a retirement account vs. a taxable account, and paying taxes on dividends.

As a value investor, you're more likely to hold stocks for the long term, which will help save money on taxes since you need to hold a stock for at least a year to pay the lower, long-term rate. Additionally, since most value stocks pay dividends and dividends are part of a value-investing strategy, it's typically smart to keep value stocks in a retirement account so you don't have to pay taxes on the dividends.

6 Best Value Stocks to Buy Now in 2026

Key Points

Top value stocks to consider

1. Berkshire Hathaway

NYSE: BRKB

Key Data Points

2. Target

NYSE: TGT

Key Data Points

3. General Motors

NYSE: GM

Key Data Points

4. Signet Jewelers

NYSE: SIG

Key Data Points

5. AT&T

NYSE: T

Key Data Points

6. Bank of America

NYSE: BAC

Key Data Points

What makes a stock a value stock?

Don't underestimate the power of value stocks

Related investing topics

Best Value ETFs to Buy in April 2026: How to Invest and Future Outlook

What is Value Investing? The Investing Strategy Investors Need to Know About

The 3 Most Overvalued Stocks to Avoid in 2026

Best Stocks to Buy Now: Our Buy-and-Hold Picks for April 2026

FAQ

Investing in value stocks FAQ

What are the risks of investing in value stocks?

What are the risks of investing in value stocks?

What are some strategies for investing in value stocks?

What are some strategies for investing in value stocks?

What is a good P/E ratio for a stock?

What is a good P/E ratio for a stock?

Why are value stocks crucial during market volatility?

Why are value stocks crucial during market volatility?

Is value investing hard?

Is value investing hard?

What is the difference between value stocks and growth stocks?

What is the difference between value stocks and growth stocks?

About the Author

Read Next

Stocks Mentioned

Premium Investing Services

4. Signet Jewelers

5. AT&T

How to find value stocks

Why invest in value stocks?

How to invest in value stocks

Reasons for undervaluing a stock

Tax considerations for value investors