Definition of Undervalued:
Buying stocks when they are undervalued is a key component of famed investor Warren Buffett's value investing strategy.
Undervalued is a financial term referring to a security or other type of investment that is selling in the market for a price presumed to be below the investment's true intrinsic value. An 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 generation, and capital management to estimate the stock's intrinsic value. In contrast, a stock deemed overvalued is said to be priced in the market higher than its perceived value.
Not valued or appreciated highly enough.
A SECURITY whose price is expected to rise because it is trading below a level that can be justified by its current or estimated earnings, as measured by its price to earnings ratio (P/E). See Bottom Fishing; Value Investing.
How to use Undervalued in a sentence?
- Buying undervalued stock in order to take advantage of the gap between intrinsic and market value is known as value investing. .
- For a stock to be undervalued means that the market price is somehow “wrong” and that the investor either has information not available to the rest of the market or is making a purely subjective, contrarian evaluation. .
- An asset that is undervalued is one that has a market price less than its perceived intrinsic value.
Meaning of Undervalued & Undervalued Definition