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Undervalued

What does 'Undervalued' mean

Undervalued is a financial term referring to a security or other type of investment that is selling for a price presumed to be below the investment's true intrinsic value. A undervalued stock can be evaluated by looking at the underlying company's financial statements and analyzing its fundamentals, such as cash flow, return on assets, profit retention and capital management, to determine said stock's intrinsic value.

Explaining 'Undervalued'

Value investing is not foolproof, however. There is no guarantee as to when or whether a stock that appears undervalued will appreciate. There is also no single correct way to determine a stock's intrinsic value — it is basically an educated guessing game.

Value Investing

Value investing is an investment strategy that looks for undervalued stocks or securities within the marketplace with the goal of purchasing or investing them. Since the assets can be acquired at a relatively low cost, the investor hopes to improve the likelihood of a return. Additionally, the value investing methodology avoids purchasing any items that may be considered overvalued in the market place for fear of an unfavorable return.

Alternate Definitions

Value investing can also refer to the concept of investing in companies based on an investor's personal values, also known as value-based investing. In this investment strategy, the investor chooses to invest based on what he personally believe in, even if market indicators do not support the position as profitable. This can include staying away from investments in companies with products he does not support and directing funds to those he does. For example, should an investor be against cigarette smoking but support alternative fuel sources, he would invest his money accordingly.


Further Reading


The state finance law: overlooked and undervalued
www.tandfonline.com [PDF]
After a lengthy process of deliberation, the Indonesian parliament recently passed Law 17/2003 on State Finance. The prime objective of the legislation is to ensure that public finances are managed in an efficient, effective, transparent and accountable manner. To …

Has the Chinese currency been undervalued?Has the Chinese currency been undervalued?
www.tandfonline.com [PDF]
After a lengthy process of deliberation, the Indonesian parliament recently passed Law 17/2003 on State Finance. The prime objective of the legislation is to ensure that public finances are managed in an efficient, effective, transparent and accountable manner. To …

Is the Chinese currency undervalued? Empirical evidence and policy implicationsIs the Chinese currency undervalued? Empirical evidence and policy implications
www.tandfonline.com [PDF]
After a lengthy process of deliberation, the Indonesian parliament recently passed Law 17/2003 on State Finance. The prime objective of the legislation is to ensure that public finances are managed in an efficient, effective, transparent and accountable manner. To …

Developmental states and undervalued exchange rates in the developing worldDevelopmental states and undervalued exchange rates in the developing world
www.tandfonline.com [PDF]
After a lengthy process of deliberation, the Indonesian parliament recently passed Law 17/2003 on State Finance. The prime objective of the legislation is to ensure that public finances are managed in an efficient, effective, transparent and accountable manner. To …

Should developing countries undervalue their currencies?Should developing countries undervalue their currencies?
www.sciencedirect.com [PDF]
After a lengthy process of deliberation, the Indonesian parliament recently passed Law 17/2003 on State Finance. The prime objective of the legislation is to ensure that public finances are managed in an efficient, effective, transparent and accountable manner. To …

Overvalued or undervalued Euroland entry?Overvalued or undervalued Euroland entry?
www.tandfonline.com [PDF]
After a lengthy process of deliberation, the Indonesian parliament recently passed Law 17/2003 on State Finance. The prime objective of the legislation is to ensure that public finances are managed in an efficient, effective, transparent and accountable manner. To …



Q&A About Undervalued


Who determines if an asset is undervalued?

An investor can determine if an asset is undervalued by looking at the underlying company's financial statements and analyzing its fundamentals, such as cash flow, return on assets, profit retention and capital management.

What are some ways to determine if an asset is undervalued?

The investor can look at the underlying company's financial statements and analyze its fundamentals, such as cash flow, return on assets, profit retention and capital management.

How do you know when or whether a stock that appears undervalued will appreciate?

There is no guarantee as to when or whether a stock that appears under valued will appreciate. There also no single correct way to determine a stocks intrinsic value it’s basically an educated guessing game.

What is the definition of Undervalued?

Undervalued is a financial term referring to a security or other type of investment that is selling for a price presumed to be below the investment's true intrinsic value.

What does undervalued mean?

A stock that appears undervalued will appreciate.

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