Value stocks

In an approach focused on value stocks, the investor chooses to invest in companies whose stocks are trading at relatively low prices compared to the companies' growth prospects and assets. The investor uses certain ratios to evaluate these companies, and believes that these stocks will rise when the market recognizes their true value.

This approach is called "conservative".

For example, you might buy some bank stocks if you felt they were undervalued with respect to the market in general.

However, although the core value of the company may seem good, be careful. Stock traded at a lower price could also be a sign that the company's financial situation is deteriorating.