What Are Value Stocks?
When a company’s growth rate drops to a more modest level that’s sustainable over the long haul, its stock is considered value stock. Unlike growth stocks, many value stocks pay their shareholders dividends. Growth rates eventually level out at some point due to natural limits on the market for a company’s product or service.
For example, take electricity. The electric company can only sell so much electricity to you each month, and regardless of market conditions, you’re likely going to find a way to pay your electric bill. Thus electric companies provide stability to withstand any economic condition.
Examples of value stocks are Southern Co., AT&T, Pepsi, JP Morgan Chase, and Lockheed Martin.