Investor Glossary-undervaluedInvestor Glossary-undervaluedInvestor Glossary-undervaluedInvestor Glossary-undervaluedInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Undervalued

The HTML to link to this page
 

A stock is undervalued when, based on fundamentals like earnings and growth prospects, it should be selling at a higher price than it is. Whether or not a stock is undervalued, however, is always an opinion - one analyst's undervalued stock is another analyst's sell recommendation. Indeed, some would say there is no such thing as an undervalued (or overvalued) stock, because the price of a stock is, by definition, what it's worth. Many investors argue, however, that the market may temporarily price stocks too high or too low, and it is possible to find undervalued stocks. Investors use various indicators to determine whether a stock is undervalued. Perhaps the best known measure for finding an undervalued stock is the price earnings ratio (P/E). Consider Acme and Universal, which are in the same industry and have similar fundamentals. If Acme has a P/E of 15 and Universal's is 20, then Acme could be an undervalued stock. Finding undervalued stocks is rarely that simple, however, and investors must often do considerable research to find equities that are truly undervalued.



Rate this undervalued definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: balance sheet, Zero Cost Collar, LIBOR, implied volatility, wholly-owned subsidiary, inflation, per diem, Key Rate Duration, open position, limit order, 144a, ex-dividend, covered put, EBITDA, option premium, retained earnings, annual return, quality assurance, diluted share, labor relations, ex-dividend date, 401a, average price per share, deferred revenue, 1035 exchange, risk management, in escrow, command economy, required rate of return, liquidity ratio, minority interest, cancelled check, current ratio, reverse mortgage, FTSE, 1031 exchange, real GDP, FICO score, stock split, irrevocable trust, margin rate, APR, VIX, phantom income, stock market close, deferred tax, dividends payable, debt service coverage, class C shares


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use