We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is a Small-Value Stock?

Jim B.
By
Updated: May 17, 2024
Views: 3,293
References
Share

A small-value stock is one issued by a company that has a small market capitalization, or only represents a small portion of the market. This type of stock can be valuable for investors because it is trading at a price that is either near or lower than its actual value. Many investors feel that this combination represents the best possible opportunity to find a stock that will be profitable over a long period of time. Since a small-value stock does not command a large share of the market, it has the opportunity to grow into a larger player on the market. In addition, value stocks are often considered to be better bets than the counterparts, growth stocks, which may be trading at a premium due to the positive reports associated with them.

Investors playing the stock market are generally in search of stocks that have great potential. That potential might be realized well in the future or perhaps can even be fulfilled in the short-term. If an investor can pick out a company that has the ability to grow in size and is trading at a low price, he or she could be in possession of a potential moneymaker. A small-value stock could represent the best of both worlds to an investor.

The first component that a small-value stock must possess is a relatively small market capitalization. Market capitalization, which is measured by multiplying the outstanding shares of a stock by its market price, is a representation of the portion of the market inhabited by the underlying company. Smaller companies can grow into bigger ones, whereas larger ones have very little room for improvement.

In addition to having a small market capitalization, a small-value stock must, as the name implies, provide value to the investor. What this means is that the stock price is not reflective of the worth of the company that is issuing it. Growth stocks, which are on the opposite end of the stock spectrum, often are issued by highly publicized companies and, as a result, may be selling at a price in excess of their worth.

It is common for a small-value stock to be issued by a company without a big name in a nondescript industry. These realities will often repel investors, even if the company has the chance to be extremely profitable, which will eventually result in a higher stock price. Small-value stocks can, at times, be pulled along by overriding volatility in the stock market, but, if chosen correctly and held for a long period of time, can be the star performers in a portfolio.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.

Editors' Picks

Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
Share
https://www.wisegeek.net/what-is-a-small-value-stock.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.